Only 35% of adults in India have a bank account http://t.co/rGK9ugUeqY
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Emerging Market Channel: Latest Posts
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Emerging Markets
Holiday Thoughts about Three Especially Vulnerable Groups
`I try to be optimistic — especially this time of year when the days are short and cold, when almost everybody things everyone else is having a better time than they are, and now that we’re in the worst economic downturn in almost anyone’s memory. Yet I also try to be realistic about the effects of this Mini-Depression. At least three distinct groups are especially vulnerable, each quite differently: -
Emerging Markets
Latvia as the new Argentina redux
`Has Paul Krugman been reading my stuff? He is certainly thinking like me regarding emerging market risk. He has a post today talking about Latvia as the new Argentina. He says: -
Emerging Markets
Latin America and the Caribbean is better prepared to face the crisis but is not immune
Over the last six years, the region has made a number of improvements in terms of macroeconomic and financial policy. This has enabled countries to take advantage of the external boom and is now helping the region to face the crisis in a completely different way from in the past. The region has thus been able to continue growing even as the external situation seriously deteriorates. Nevertheless, many of the improvements are beginning to fade and in some cases revert.
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Emerging Markets
The current situation and the outlook for the future
1. The external situation
As of late 2008, it is not yet possible to arrive at an accurate projection of the impact that the financial crisis will have on the real sector of the economy. With uncertainties spreading worldwide, the balance sheets of financial bodies are weakening owing not only to the loss of value of mortgage guarantees but also, more generally, to the impact of the recession and the severe shortage of liquidity. The uncertainties also extend to the prospects for other major financial-market components such as insurance companies, hedge funds and pension funds, some of which have already been the object of rescue operations.
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Asia
Global Crisis and India’s Growth Rate
Rajiv Kumar* Mathew Joseph* Karan Singh*
India had a dream run of five years during 2003-08 as the GDP growth averaged nearly 9 per cent annually for five years, the best ever run over five years ever! The economy began to slow down from the middle of 2007-08. A 9 per cent growth apparently could not be sustained, being clearly beyond India’s potential rate of growth which has been estimated by more than one agency to be around 8.5 per cent. And as the economy overheated, the central bank tightened credit slowly initially but harder since 2006-07. As an expected outcome, the economy began to slow down. Some of us had argued that th tightening was going too far and over reacting to inflationary fears which were largely arose from global factors. The policy makers and none of us had foreseen the external shock arising from the global crisis which began with the financial meltdown in the US. The interesting question therefore is: what would India’s growth rate have been in response to the policy measures without the global crisis as compared to what it is likely to be in the context of the on going global crisis.
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Emerging Markets
Measures Implemented in the Latin America and the Caribbean to Cope With the Escalating Crisis
The Latin American and Caribbean countries have adopted a variety of measures in response to the deepening international financial crisis. They are well aware that, although most of them have macroeconomic foundations that are significantly stronger than in the past, the region will not escape the impact of instability in world financial markets and the expected recession in the developed economies.
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Emerging Markets
Argentina’s crisis response: some likely effects
1. Argentina’s economy is slowing down—a recession can not be disregarded for 2009. Data on this abound from any bank or investment-research firm (domestic or foreign).
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Emerging Markets
The Transmission of the Crisis to Latin America and the Caribbean
Within the framework of this generally bleak outlook, in which the factors driving growth in Latin America and the Caribbean in the past few years have all but disappeared, the international crisis is being transmitted through various channels that are, in turn, having different effects on each one of the countries of the region.
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Emerging Markets
Blackouts and Cascading Failures of the Global Markets
The global economic crisis is akin to a power blackout. In both cases, a disturbance in one part of a complex “tightly coupled” system results in a cascade of failures through an entire network. In the case of a power blackout, a single downed power line or transient overload causes power to be shunted to another part of the grid, which in turn leads to new overloads, more shunting and ultimately to a cascade of failures that pushes a region into darkness. Similarly, in the current economic crisis, a U.S. banking emergency caused by worsening U.S. market forces has sent shock waves through the world’s financial system, causing a global banking crisis that now threatens to lead to a global economic downturn.
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Emerging Markets
Mexico: Iceberg Dead Ahead!
An aroma of prosperity wafts through the sunny air of Mexico City. New buildings and hotels grace the skyline, the mayor is expanding the public transportation system and families are preparing for the year-end holidays.
