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The current global financial turmoil and Asian developing countries

Author

Listed:
  • Yılmaz AKYÜZ

    (UNCTAD)

Abstract

The world economy is now in difficult straits as a result of the financial turmoil sparked by the subprime crisis in the United States. In this turbulent environment, prospects for sustaining global growth and stability seem to hinge more than ever on developing countries, particularly the emerging-market economies of Asia. This paper contends that the current difficulties are linked to prior financial excesses and regulatory shortcomings which led to a buildup of vulnerabilities in financial and asset markets. The extent to which the Asian countries can decouple their growth from this ongoing turmoil depends on their prevailing domestic economic conditions and their policy response to possible shocks from the crisis. In this respect, fragilities and imbalances exist in many major Asian economies, not least in the form of credit, asset and investment bubbles which were allowed to expand in recent years as foreign capital poured in. Nonetheless, in general, the author maintains, countries in the region do have the policymaking capacity to deal with any adverse trade and financial impacts of the crisis. Beyond the macroeconomic policy response to the present conditions, however, lies an urgent need for regulatory measures which will reduce the systemic instability generated by financial markets and capital flows in the first place.

Suggested Citation

  • Yılmaz AKYÜZ, 2008. "The current global financial turmoil and Asian developing countries," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 23(273), pages 7-49.
  • Handle: RePEc:iif:iifjrn:v:23:y:2008:i:273:p:7-49
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    Citations

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    Cited by:

    1. Siregar, Reza Yamora & Lim & C.S. Vincent, 2010. "The Role of Central Banks in Sustaining Economic Recovery and in Achieving Financial Stability," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp74, April.
    2. Ercan Uygur, 2010. "The Global Crisis And The Turkish Economy," Working Papers 2010/3, Turkish Economic Association.

    More about this item

    Keywords

    Financial crisis; international transmission; global outlook;

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F30 - International Economics - - International Finance - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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