Publication: What Effect Will East Asia's Crisis Have on Developing Countries?
Date
1998-03
ISSN
Published
1998-03
Author(s)
Dadush, Uri
Lynn, Robert
Riordan, Mick
Dasgupta, Dipak
Johannes, Ronald
Abstract
This note summarizes recent projections
on the longer-term effects of the East Asia's financial
crisis, and the significant effect already felt in
developing countries. Five main points are examined, as
follows: 1) though trade will drive the recovery, adjustment
will be deep and protracted, in the region, mostly in
Indonesia, Korea, Malaysia, the Philippines and Thailand; 2)
developing countries will be mostly affected, since
reductions in growth are estimated to double due to high
trade multipliers, terms of trade movements, as well as
tight monetary and fiscal policies in those countries
relying on private capital flows; 3) because of lower oil
prices, oil importing countries stand to lose the most, with
Latin America, the Middle East, and North and Sub-Saharan
Africa the hardest hit; 4) the crisis will bear a
significant effect on the world economy, though not nearly
as damaging as the 1973 and 1978 oil shocks; and 5)
increased risks, such as a spillover or cutoff in credit,
for developing countries are estimated, though predicted to
be manageable.
Citation
“Dadush, Uri; Lynn, Robert; Riordan, Mick; Dasgupta, Dipak; Johannes, Ronald. 1998. What Effect Will East Asia's Crisis Have on Developing Countries?. PREM Notes; No. 1. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/11558 License: CC BY 3.0 IGO.”