Global Financial Crisis and its Implications for Asia

Purpose

The conference will revisit evidence and analysis of the impacts of the global financial and economic crisis on Asian countries, with the aim of setting up a reference basis for subsequent conferences dealing with appropriate policy responses in the region.

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Background

The US subprime crisis broke out in the United States (US) in August 2007, which subsequently paralyzed global financial systems and threw the US economy into the severe recession. The crisis has now become a global one, affecting emerging economies as well, has now spread to furthest limits of the world economy. It brought a sharp economic downturn made financial systems dysfunctional and impeded trade flows and curtailed availability of global liquidity.

Even though this crisis did not originate in Asia, and, indeed, Asian countries in structural terms are generally in good shape, Asian economies and financial markets have already begun to feel the impacts of the crisis, and these are likely to deepen substantially over the coming year. The most obvious areas of impact have been exports and equity markets, which have declined sharply across the region, but stresses in currency and credit markets have emerged as well, and domestic demand has softened. This sensitivity has been heightened by the export-led growth strategies pursued by most economies in the region. Although there are now signs of global recovery, many observers including the IMF have claimed that the recovery will be slow. Because a crisis can have long-term developmental implications, ADBI is keen in making a contribution to the understanding of the origin and causes of the crisis and formulation of policy measures that ADB's developing member countries could adopt to respond to this crisis and return to the path of sustainable growth.

ADBI is conducting a series of conferences related to the crisis, including identifying its likely impacts on Asian countries, developing scenarios for growth re-balancing away from exports, and developing recommendations related to macroeconomic policy, structural and institutional innovations, regional integration and financial reform. This conference will be conducted in the United States to focus on issues related to the current development of crisis, global imbalances, monetary policy and banking systems responses.

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Objectives

The conference will revisit evidence and analysis of the impacts of the global financial and economic crisis on Asian countries, with the aim of setting up a reference basis for subsequent conferences dealing with appropriate policy responses in the region. The output of the conference will be discussion papers, possibly leading to a book. The three major areas included in this conference are:

• Global imbalances and liquidity: review of global imbalances and global liquidity. The focus will be on the world, the People's Republic of China, and Asia.
• Status of financial crisis: Update of development of the crisis, impact and implications for Asia. The focus will be on the world and Asia.
• Capital flows and crisis, and management: how to prevent recurrent capital overflows and crisis.

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Outputs

ADBI working papers

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Partners

Korea Institute for International Economic Policy
Claremont University