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Global Shocks and their Impacton Low-Income Countries: Lessons From theglobal Financial Crisis
Author: Mr. Chris Papageorgiou, Hans Weisfeld, Ms. Catherine A Pattillo, Mr. Martin Schindler, Mr. Nikola Spatafora, and Mr. Andrew Berg
Series:
IMF Working Papers
Volume/Issue:
Volume 2011: Issue 027
Language:
English
Publication Date:
01 Feb 2011
DOI:
https://doi.org/10.5089/9781455216741.001
ISBN:
9781455216741
ISSN:
1018-5941
Pages:
51
Keywords:
WP; growth rate; Per-Capita GDP Growth; Global financial crisis; Low-income countries; External shocks; Short-run growth; external demand; non-fuel-exporting middle-income countries; regression analysis; demand growth; FDI shock; terms of trade growth; Terms of trade; Foreign direct investment; Production growth; Labor market flexibility; Exchange rate arrangements; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper investigates the short-run effects of the 2007-09 global financial crisis on growth in (mainly non-fuel exporting) low-income countries (LICs). Four conclusions stand out. First, for many individual LICs, 2009 was not extraordinarily calamitous; however, aggregate LIC output declined sharply because LICs were unusually synchronized. Second, the growth declines are on average well explained by the decline in export demand. Third, if the external environment facing LICs improves as forecast, their growth should rebound sharply. Finally, and contrary to received wisdom, there are few robust relationships between the cross-country growth variation and the policy and structural environment; the main exceptions are reserve coverage and labor-market flexibility.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund