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Complete
Report (1.38MB)
Overview and Front
Matter:
Copyright information, Table
of Contents, Foreword, Summary, Abbreviations,
Acronyms and Data Notes (72KB)
THERE IS A SINGLE SET OF EVENTS THAT DOMINATES THE WORLD ECOnomic
scene today as it has for more than a year: the global
economic crisis that began in Thailand on July 2, 1997, spread
from there to Indonesia and Korea, then to Russia, then to Latin
America. Few countries have not been touched by the global forces that
this crisis—by some accounts the worst since the 1980s debt crisis—has
unleashed. Some countries have gone, in the space of a few short months,
from robust growth to deep recession. The social consequences of this
economic downturn are already manifest, with interrupted education,
increased poverty, poorer health.
French
(29KB)
En raison des événements qui se sont succédé pendant les 12 derniers mois, à
commencer par la crise qui a secoué l’Asie de l’Est bien plus profondément
qu’on ne s’y attendait, les perspectives qui s’offriront aux pays en développement
et à l’économie mondiale au cours des trois prochaines années se sont
nettement assombries et l’avenir est devenu plus incertain. Coup sur coup, et
avec une rapidité inattendue, le Japon a plongé dans la récession, la Russie
s’est heurtée à de graves difficultés financières, les apports de capitaux aux
marchés émergents ont chuté et les marchés des capitaux internationaux,
beaucoup moins enclins à prendre des risques, ont fortement réduit le volume
des crédits, menaçant ainsi d’asphyxier la croissance. El Niño et d’autres
catastrophes naturelles ont en outre fait sentir leurs effets négatifs dans de
nombreuses régions du globe.
Spanish
(18KB)
Debido a los acontecimientos registrados en los 12 últimos meses, comenzando
por la crisis de Asia oriental --mucho más profunda de lo previsto--, las
perspectivas de los países en desarrollo y la economía mundial en los tres
próximos años son ahora mucho más difíciles e inciertas. Las malas noticias se
han sucedido con sorprendente celeridad y continuidad: el Japón se ha hundido
en la recesión, Rusia ha encontrado graves dificultades financieras, los flujos de
capital hacia los mercados emergentes han caído de forma brusca y, en medio
de un ambiente de creciente aversión del riesgo en los mercados financieros
mundiales, se ha producido una contracción del crédito capaz de sofocar el
crecimiento. Además, muchas partes del mundo han acusado los negativos
efectos de El Niño y otras catástrofes naturales.
En consecuencia, una fuerte desaceleración mundial de la producción, el
Chapter 1:
(417KB)
Prospects for Developing Countries after the
East Asian Crisis
IN THE AFTERMATH OF THE EAST ASIAN FINANCIAL CRISIS, THE SHORT-TERM
outlook for developing countries and the world economy is now
much more difficult and laden with downside risk than was anticipated
in last year’s report. The outlook then was for continuation of
the favorable external environment and better performance of developing
countries, including positive spillovers from rapid growth in the five
largest countries. Growth in developing countries (excluding the transition
economies) was more than 5 percent a year in 1991–97, up from only
3 percent in 1981–90. World growth was strong at more than 3 percent in
1991–97.
Chapter 2:
(545KB)
Responding to the East Asian Crisis
IN THE SECOND HALF OF 1997 SEVERAL EAST ASIAN CRISIS COUNTRIES
experienced a massive reversal of the large foreign private capital
inflows they had enjoyed through much of the 1990s. The net swing
from inflows to outflows between 1996 and 1997 amounted to more
than $100 billion for the five crisis countries—Indonesia, the Republic of
Korea, Malaysia, the Philippines, and Thailand—or 11 percent of their
gross domestic product (GDP) before the crisis. The reversal precipitated
steep devaluations of currencies, large increases in interest rates, and
severe declines in stock and other asset prices, initiating the deep financial
and economic crises that have gripped these countries since. Contagion
effects from the crisis spread throughout the developing world. But
instead of dying away quickly, as they did after the 1994 Mexico peso
crisis, they were the precursor of currency and financial crises in the
Russian Federation in August 1998, followed by a more general withdrawal
of private capital from emerging markets.
Chapter 3:
(313KB)
Preventing Financial Crises in Developing
Countries
FINANCIAL CRISES OCCUR WHEN FINANCIAL SYSTEMS BECOME ILLIQUID
or insolvent. Such crises have recurred throughout the history of
capitalism. A collapse in investor confidence, usually after a
period of market euphoria, marks such crises—examples include
the Dutch tulip mania crisis of 1637–38, the Indian cotton futures market
crash of 1866, and the Great Depression of 1929. When foreign lenders
are involved, cross-border payments problems arise as well.
The East Asian crisis belongs to the class of twin financial crises, involving
both banking and currency problems. According to modern economic
theory, information asymmetries and financial market failures are
central in explaining macroeconomic fluctuations and financial crises...
Appendix
1:
Regional Economic Prospects
This chapter is from a prepublication
version of Global Economic Prospects.
The pagination here will be different
from the final book, which will be
available by December 14 1998.
Appendices:
(187K>
Appendix 1: Regional Economic
Prospects;
Appendix 2: Global Economic Indicators,
Technical Notes, Classification of Economies
About the Report
Global Economic Prospects and the Developing Countries 1998/99:
Beyond Financial Crisis
Global Economic Prospects and the Developing Countries 1998/99: Beyond
Financial Crisis analyzes short- and long-term future prospects for
developing countries in the wake of the East Asia crisis; maps out policies to
deal with crises once they erupt; and focuses on ways to prevent future crises
on the scale of East Asia’s recent experience.
The global slowdown in economic growth between now and 2000 will hurt people
in developing countries the most. Hardest hit will be people in countries that
rely on exports of primary commodities, countries that depend on private capital
flows to finance large current account deficits, and countries that trade more
with major export markets where demand is now faltering.
Financial crises in emerging markets have many common symptoms: massive loss
of confidence, capital outflows, falling currencies and failing banks. But the
specific causes -- especially factors precipitating the loss of confidence --
often differ. Different causes merit different policy responses. Crises such as
in East Asia hurt the poor most. Protection of their interests need to be more
central in the design of appropriate policy responses.
In many developing countries there is a growing mismatch between public
policies and institutional structures, and their rapid integration with world
financial markets. The result: more and bigger financial crises. Financial
crises -- and their costs -- are also on the rise in developing countries
because these relatively small economies are much more exposed to the risks of
capital flow reversals associated with international financial market
failures.
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