The Global Economic Crisis and Asian Developing Countries: Impact, Policy Response and Medium Term Prospects

After several years of impressive growth, the world economy encountered an equally impressive downturn starting in the third quarter of 2008, triggered by financial fragility and imbalances generated by speculative lending and investing and debt-driven spending in major advanced economies. Initially there was widespread optimism that growth in developing and emerging economies of East Asia would be decoupled from the difficulties that pervaded advanced economies, and the region would continue to surge ahead. However, the region could not avoid a significant drop in growth, in large part because of a sharp contraction in exports. This paper explores the impact of the global crisis on Asian developing and emerging economies.