1、2The CrisisPolicy ResponsesOutlook3The sub-prime mortgage bubble in the US was the detonator of the current crisisThe extensive use of derivatives made the exposure to the mortgage crisis explosiveThe chain reaction was globalized because of:The links among the financial sectors in OECD and emerging
2、 countries The high dependence of international trade on US demand4 Deepening recession since mid-2019 with multiple downwards revisions of growth Contagion from the developed to emerging and less developed economies Downward cycle through Trade and weakening demand Capital flow Remittance Commodity
3、 price Reinforcing expectation for global depression and deflation5GDP Growth6Source:World Development Indicators 2019 and IMF World Economic Outlook Update,January 28,2009 7China:Growth practically ground to a halt in 2019 Q4-Annual growth rate in 2009 expected to fall to 6.7%from 9.0%in 2019 Expor
4、ts plunged 17.5%year-on-year in January 2009the largest drop in almost 13 years Imports down 43%year-on-year,partly explained by adjustment in inventory.Singapores GDP fell at an annualized rate of 17%and South Koreas at 21%in Q4 2019Industrial production in the 12 months to December,2019 is down 21
5、%in Japan,14%in Singapore,19%in South KoreaSource:IMF World Economic Outlook Update,January 28,20098ChinaJordanMexicoIndiaSource:National Agencies through Thomson/Datastream.Source:Institute for International Finance:“Capital Flows To Emerging Market Economies.”01/27/09.Exports(Volumes,Change%3 mma
6、y/y)Private Net Capital Flows to Emerging Economies 9Source:World Development Indicators 2019 and IMF World Economic Outlook Update,January 28,2009 10Source:World Development Indicators 2019Note:Crisis events are Argentina(2019-2019);Indonesia,Korea,Russia,Thailand,and Brazil(2019-2019);Mexico(1994)
7、and Turkey(2000-2019)11Policy responseShort-termLong-termCountry levelSimilar responses across countriesFiscal and monetary policies to stimulate aggregate demandDiverse responses depending on the initial conditionssaving rates,current account balanceSustainable growthpoverty,environment,educationGl
8、obal responseCoordinated responsesbanking sector,financial system,liquidity,interest rates,open trade regimeInternational policy coordination mechanismssurveillance,environment,climate change A framework for assessment 12FiscalTrade PovertyEnvironmentConsumptionConsumptionInvestmentsInvestmentsLiqui
9、dity Liquidity Financial systemFinancial systemMarket confidenceMarket confidence Sustainable Sustainable growthgrowthSocial stability Social stability harmonyharmonyTerms of tradeTerms of tradeValue chainValue chainCRISISFinancial13Often receive early attention U.S.Housing market:3 million foreclos
10、ures(2019)U.S.Banking sector:$1-$2 trillion net cost of bailout World stock markets:Almost 50%loss in the total capitalization in 2019-$30 trillion of wealth disappearedNeeded measures:Adequate prudential regulations with the increasing sophistication and dynamism of global markets Capture the full
11、risk implications of securitized mortgage loans and derivatives Sound development of the financial sector in developing countries14Stimulus packages a stark difference from the 1990s US:Tax cuts and priority investments around$800 bn Japan:Three packages-$112 bn Germany:Two packages for infrastructu
12、re,tax cuts,clean energy-$106 bn United Kingdom:VAT reduction,capital spending-$27.8 bn China:Infrastructure,housing-$586 bn India:Export incentives,guarantees,refinance facility-$4.1 bnShort-term vs.long-term choices:Countries with low or negative savings need more than sustained fiscal stimulus to
13、 emerge from the crisis Countries with high savings rates can combine the short-term fiscal stimulus with a longer-term expansionary policy15 The multiplier effects of the slowdown through the trade system China:Decreased export demand,20 million migrant factory workers without jobs Momentum towards
14、 protectionism gains force in crises USA:“Buy American”requirements Russia:raised tariff on imported cars India:5%duty on select steel and iron products Argentina and Brazil:approved tariffs on wine and textiles China:increased export-tax rebates on 3,700 goods Protectionism will worsen the global c
15、ontraction Strong international commitment to resist closing in critical16 Social and poverty impact of crises should be anticipated 1%reduction in GDP traps another 20 million people in poverty,100 million more people in poverty with the global recession Millions live very close to the poverty line
16、,so even small GDP changes produce vast swings in poverty Past responses to crises ignored poverty impact in the early stages More attention needed to vulnerable groupspotential area for the World Bank Group to contribute Impact on immigrant labor:Foreign and domestic migration,remittances17Tensions
17、 between:Short-and long term objectiveseconomic recovery,mitigation,adaptation Domestic and global objectivesglobal public goodsThese tensions increase in crisis periods 30-50%reduction in wind and solar installations in U.S.Support for climate funds under threat in the EU and elsewhereDanger of bac
18、ktracking on environmental policies18 Early,rapid and sizeable responses are key Social safety-net and pro-poor policies need support from the outset Policies need to account for behavior and the political economy Immediate responses cannot ignore implications for development Global crisis needs a g
19、lobal solutiontarget stimuli where the marginal impact will be the greatest*How to Solve the Global Economic CrisisJustin Yifu Lin,Senior Vice President and Chief Economist,World Bank19Emphasize not only volume,but also quality Focus on poverty from the outsetBuild in the environment and climate cha
20、ngeSeek selectivity and adaptability of response Stress coordination among partners Focus on monitoring and evaluationOrganize for early warning 20The WBG has a key role through:Financial support Policy advice and knowledge sharingCatalytic role in cross-country policy coordinationHelping to balance
21、 national and global goalsLong term partnership with countries,even when its share in rescue packages is modest 2122“all consequential events in human history have come from unexpected,rare occurrences”Nassim Nicholas Taleb23Global economic downturn Outlook highly uncertain The timing of the recover
22、y depends critically on policy actions Rising poverty worldwide The situation exacerbated by growing unemploymentClimate crisis Environmental devastation and global warming can derail all progress This could be an inflection point for our planet A new development paradigm is needed24Brazils fiscal r
23、esponsibility law;Indias 1991 reforms;Koreas financial sector actions.China revitalized after the Asian crisis Liberalization of the housing market Easing restrictions on privatization of medium SOEs Acceleration of the entry to WTO Investment in releasing bottlenecks-highway,port facility,telecommu
24、nication,high education China today Opportunities in human capital;private sector;openness;infrastructure*New ways of green investments *David Dollar,Sustaining growth:Chinas need for a new growth model,November 19,201925 Opportunity of fiscal stimulus to improve investments Target high growth areas
25、Improve efficiency and raise productivityPromote green investments Opportunity of political support during crisis to reform the domestic economyFinancial and regulatory reformAddress long term macro imbalancesMaintain open trade policiesDeepen social safety-net and inclusive growthBreakthrough in th
26、e environment and climate change Opportunity for global actionsInternational regulatory framework for trade,investment and financeGlobal action on climate,environment and biodiversityThe role of G20,international architecture and Bretton Wood II 26谢谢谢谢!Thank you!Improving Development Results Through Excellence in Evaluationworldbank.org/ieg/ifc.org/ieg/miga.org/ieg/
