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The Impact of the Global Economic Slowdown on South Asia

Author

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  • Manu Bhaskaran Asian Development Bank

    (Manu Bhaskaran is the President and Director of Centennial Asia Advisors Private Limited, Singapore.)

Abstract

The current global economic slowdown is unprecedented in scale and has severe implications on policy formulation among emerging market economies. A prolonged period of sub-par growth driven by the substantial weakening of the financial sectors will have multiple effects on these economies. In this article we shall explore the transmission mechanisms through which the global crisis impacts emerging market economies, particularly South Asia. After studying the shock amplifiers and shock absorbers present in South Asia we offer some crucial policy suggestions. In the short term, with inflation under control, aggressive monetary policy easing would be appropriate. This should be complemented by cautious fiscal stimuli. Material currency devaluation should be considered only in the event of clear misalignment. Policy coordination at the regional level should also be practised. In the longer term, structural enhancements such as increased economic diversification, infrastructure development and augmented regional integration will be the primary tools to help bolster resilience against future external shocks.

Suggested Citation

  • Manu Bhaskaran Asian Development Bank, 2009. "The Impact of the Global Economic Slowdown on South Asia," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 1(2), pages 159-239, May.
    • Handle: RePEc:sae:emeeco:v:1:y:2009:i:2:p:159-239
    DOI: 10.1177/097491010900100204
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    References listed on IDEAS

    as
    1. Siddiqui, Tasneem. & Abrar, Chowdhury R., 2003. "Migrant worker remittances and microfinance in Bangladesh," ILO Working Papers 993632983402676, International Labour Organization.
    2. repec:ilo:ilowps:363298 is not listed on IDEAS
    3. Aradhna Aggarwal, 2008. "Regional Economic Integration and FDI in South Asia - Prospects and Problems," Macroeconomics Working Papers 22141, East Asian Bureau of Economic Research.
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