World Bank2013-01-042013-01-042010-06https://hdl.handle.net/10986/12104Market nervousness concerning the fiscal positions of several European high-income countries poses a new challenge for the world economy. This arises as the recovery is transitioning toward a more mature phase during which the influence of rebound factors (such as fiscal stimulus) fades, and gross domestic product (GDP) gains will increasingly depend on private investment and consumption. So far evolving financial developments in Europe have had limited effects on financial conditions in developing countries. Although global equity markets dropped between 8 and 17 percent, there has been little fallout on most developing-country risk premia. And despite a sharp deceleration in bond flows in May, year-to-date capital flows to developing countries during the first 5 months of 2010 are up 90 percent from the same period in 2009. The economic impact on long-term growth in developing countries of a forced pullback from growth-enhancing infrastructure and human-capital investment due to lower fiscal revenues, weaker official development assistance (ODA), and sluggish capital flows, are difficult to gauge, as are the effects on private sector growth of tighter financial sector regulations, and increased competition for capital from high-income sovereigns. Global economic prospects: crisis, finance and growth estimated that just the latter two factors could reduce developing country growth rates by between 0.2 and 0.7 percent for a period of 5 to 7 years.en-USCC BY 3.0 IGOaccess to capitalasset classesasset pricebalance sheetsBank claimsbank lendingbanking systembankruptcybasis pointbasis pointsbondbond flowsbond issuancebond issuancesbond issuesbond marketsbond spreadbond spreadsbond yieldsboost to growthborrowing costsbudgetary supportcapital accountcapital account restrictionscapital flowscapital inflowscapital investmentcapital investmentscapital marketscapital outflowscarbon emissionsCDSCentral Bankcommercial bankscommoditiesCommodityCommodity priceCommodity Pricesconsumer durablescorporate bondscorporate borrowerscorporate yieldscost of capitalcountry riskcredibilitycredit defaultcredit default swapscredit ratingscreditorcreditor bankscreditorsCurrent account balancescurrent account deficitsdebt crisisdebt flowsdebt issuancedebt levelsdebt obligationsdebt ratiodebt repaymentsDebtorDebtor Reporting Systemdeveloping countriesdeveloping countrydeveloping country stock marketsdeveloping economydisbursementsdomestic marketsdurabledurable goodsEmerging marketEmerging market equitiesequitiesequity flowsequity marketequity market volatilityexchange rateexchange ratesexport growthexportersexposureexposuresexternal debtexternal financingFederal Reservefinancial capitalFinancial Crisesfinancial crisisfinancial developmentsfinancial healthfinancial institutionsfinancial integrationfinancial sectorfinancial sectorsfinancing requirementsfiscal consolidationfiscal consolidationsfiscal deficitfiscal deficitsfiscal policyfood priceFood pricesglobal economyglobal equityglobal equity marketsglobal exportsglobal financial marketsglobal financial systemglobal marketglobal marketsglobal tradegovernment accountsgovernment bondsGovernment debtgovernment debtsgovernment deficitsgovernment expendituregovernment spendinggrowth rateshuman capitalincomeindebted countriesindebtednessindividual firmsinflationinflationary pressuresinsuranceinterest rateinterest rate differentialsinterest ratesinternational bankinternational bank lendinginternational bondinternational capitalinternational capital flowsinternational capital marketsinternational financial institutionsinternational marketinventoriesinventoryinvestment decisionsinvestment projectsLabor Marketlenderliquidityloanloan exposureslocal currencylong term debtlong-term interestlong-term interest ratelong-term interest rateslong-term yieldlong-term yieldsloss of confidencelow-income countriesmarket accessmarket conditionsmarket expectationsMarket Indexmarket indicesmarket pricesmarket valuationsmarket volatilitymaturitymiddle-income countriesMonetary Fundmonetary policymoral suasionnet capitalNet debtNonperforming loansoil priceoil pricesoutputoutput gapspensionportfoliopower parityprincipal paymentsPrivate capitalPrivate capital flowsprivate capital inflowsPrivate creditorsPrivate Debtprivate investmentprivate sector growthpublic debtpublic financespurchasing powerrate of growthreal estatereal interestreal interest ratesremittanceremittancesrepaymentreservesresidential mortgagesreturnrisk aversionrisk premiumssavingssecurity concernsshort-term debtshort-term interest ratessolvencysovereign bondsovereign debtSovereign riskstock indexStock marketstock marketsstockstaxtrade deficittransition countriestreasurytreasury notetreasury securitiesvolatilitywealth effectsworld economyWorld TradeWorld Bank10.1596/12101