World Bank2012-03-192012-03-192009-09-17https://hdl.handle.net/10986/3110The financial crisis threatens the welfare of about 160 million people in the Europe and Central Asia (ECA) region who are poor or are just above the poverty line. Using pre-crisis household data along with aggregate macroeconomic outturns to simulate the impact of the crisis on households, transmitted via credit market shocks, price shocks, and income shocks, this report finds that adverse effects are widespread and that poor and non-poor households alike are vulnerable. By 2010, for the region as a whole, some 11 million more people will likely be in poverty and over 23 million more people will find themselves just above the poverty line because of the crisis. The aggregate results mask the heterogeneity of impact within countries, including the concentration of the poverty impact in selected economic sectors. Meanwhile, stress tests on household indebtedness in selected countries suggest that ongoing macroeconomic shocks will expand the pool of households unable to service their debt, many of them from among the ranks of relatively richer households. In fact, already there are rising household loan delinquency rates. Finally, there is evidence that the food and fuel crisis is not over and a new round of price increases, via currency adjustments, will have substantial effects on net consumers. Lessons from last year's food crisis suggest that the poor are the worst hit, as many of the poor in Albania, Kyrgyz Republic, and Tajikistan, for example, are net food consumers, with limited access to agricultural assets and inputs. The resilience of households to macroeconomic shocks ultimately depends upon the economy's institutional readiness, the flexibility of the economic policy regime, and the ability of the population to adjust. However, compared with previous crises, the scope for households to engage in their traditional coping strategies may be more limited. Fiscal policy responses in the short-term are also constrained by rapidly falling revenues. Governments in ECA have to make difficult choices over what spending items to protect and what items to cut, social protection programs to reform and scale-up, and new interventions to mitigate the impact of the crisis.CC BY 3.0 IGOACCESS TO CREDITACCESS TO FINANCEACCOUNTINGADVANCED ECONOMIESASSET CLASSESASSET POSITIONSASSET PRICEASSET PRICESASSET QUALITYASSET VALUESBALANCE SHEETBALANCE SHEETSBANK CREDITBANKING MARKETSBANKING SECTORBANKING SECTORSBANKING SYSTEMBANKING SYSTEMSBASIS POINTSBOND VALUATIONSBORROWINGCAPITAL ACCUMULATIONCAPITAL ADEQUACYCAPITAL FLOWSCAPITAL INFLOWSCAPITAL OUTFLOWSCDSCENTRAL BANKCOLLATERALCOMMODITY PRICECOMMODITY PRICESCONSUMER DURABLESCONTINGENT LIABILITIESCREDIT CONSTRAINTSCREDIT CRUNCHCREDIT DEFAULTCREDIT DEFAULT SWAPSCREDIT GROWTHCREDIT MARKETCREDIT MARKETSCREDIT OUTSTANDINGCREDIT RISKCREDIT RISKSCREDIT SOURCESCREDIT SPREADSCREDITORCREDITOR BANKCREDITOR BANKSCRISIS COUNTRIESCURRENCY DEPRECIATIONSCURRENT ACCOUNT DEFICITSDEBTDEBT BURDENSDEBT HOLDINGDEBT OBLIGATIONSDEBT REPAYMENTSDEBT SERVICEDELINQUENCY RATESDEPOSITDEPOSITSDEVALUATIONSDEVELOPING COUNTRIESDEVELOPING COUNTRYDIVERSIFICATIONDOMESTIC BANKINGDOMESTIC CREDITDOMESTIC LIQUIDITYDURABLESEARNINGSECONOMIC ACTIVITIESECONOMIC ACTIVITYECONOMIC CRISISECONOMIC DEVELOPMENTSECONOMIC EFFICIENCYECONOMIC GROWTHECONOMIC POLICYEMERGING ECONOMIESEMERGING MARKETEMERGING MARKETSEMPLOYMENT OPPORTUNITIESEQUIPMENTEQUITIESEQUITY HOLDINGSEQUITY INDEXEQUITY INDICESEQUITY MARKETEXCHANGE RATEEXCHANGE RATESEXPORT EARNINGSEXPORT GROWTHEXPORTERSEXTERNAL FINANCEEXTERNAL FINANCINGEXTERNAL FUNDINGEXTERNAL SHOCKSFAMILIESFAMILY INCOMEFINANCIAL ASSETSFINANCIAL CRISESFINANCIAL CRISISFINANCIAL INSTITUTIONSFINANCIAL LITERACYFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL POLICIESFINANCIAL RISKFINANCIAL SECTOR DEVELOPMENTFINANCIAL SHOCKSFINANCIAL SUPPORTFINANCING REQUIREMENTSFISCAL DEFICITSFISCAL POLICYFIXED EXCHANGE RATEFOREIGN BANKFOREIGN CURRENCIESFOREIGN CURRENCYFOREIGN CURRENCY EXPOSURESFOREIGN INVESTORSFUNDING SOURCESGENDERGLOBAL DEVELOPMENT FINANCEGLOBAL FINANCIAL STABILITYGLOBAL TRADEGOVERNMENT DEFICITSGOVERNMENT POLICIESGOVERNMENT POLICYGOVERNMENT SPENDINGHOME OWNERSHIPHOST COUNTRIESHOUSEHOLD DEBTHOUSEHOLD INCOMEHOUSEHOLD INCOMESHOUSEHOLD WEALTHHOUSEHOLD WELFAREHOUSING LOANSHUMAN CAPITALINCOME FLOWSINCOME SHOCKINCOME SHOCKSINDEBTED HOUSEHOLDSINDEBTEDNESSINFLATIONINFLATION RISKSINFORMAL CREDITINSURANCEINTEREST RATEINTEREST RATE RISKSINTEREST RATESINTERNATIONAL BANKINTERNATIONAL BANKINGINTERNATIONAL FINANCEINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL FINANCIAL STATISTICSINVENTORIESINVESTMENT PROJECTSLABOR MARKETLIABILITYLIABILITY SIDELIMITED ACCESSLIQUIDITYLIQUIDITY PROBLEMSLIQUIDITY RISKLIQUIDITY RISKSLIVING STANDARDSLOANLOAN DELINQUENCYLOCAL CURRENCIESLOCAL CURRENCYMACROECONOMIC CRISESMACROECONOMIC STABILITYMARKET CONDITIONSMARKET PRICESMARKET PRICINGMATURITYMATURITY MISMATCHESMICRO DATAMIGRANT LABORMONETARY FUNDMONETARY POLICYMORTGAGEMORTGAGE DEBTMORTGAGE LOANSMORTGAGESMUTUAL FUNDMUTUAL FUNDSNATIONAL BANKOIL PRICEPENSIONPENSION FUNDPENSION FUNDSPENSION PROVISIONPENSION SYSTEMPENSION SYSTEMSPENSIONSPOLICY RESPONSEPOLICY RESPONSESPOLITICAL ECONOMYPORTFOLIOPORTFOLIO RISKPRICE CHANGESPRICE MOVEMENTSPRIVATE CAPITALPRIVATE CREDITPUBLIC FINANCESPUBLIC INVESTMENTSRECESSIONREMITTANCEREMITTANCESRESERVESRETURNSRISK AVERSIONRISK MITIGATIONSAFETY NETSAFETY NETSSAVINGSSECONDARY MARKETSOCIAL CAPITALSOLVENCYSOVEREIGN BONDSTANDARD ASSETSTOCKSTRADE BALANCETRADE CREDITSTRADINGUNEMPLOYMENTUNEMPLOYMENT INSURANCEUNIONVALUATIONVULNERABLE HOUSEHOLDSWEALTH EFFECTWEALTH EFFECTSWorld Bankhttps://doi.org/10.1596/3110