The Impact of the Global Economic Recession on the Emerging Markets

Résumé du document

Developed countries are facing our today's global economic recession with difficulties like the previous financial crises. Are Emerging economies undergoing this crisis differently? According to Minsky and his readjustment of Fisher's theory, today's subprime crisis which affects the real estate sector is quite similar to the previous crises, especially the Asian crisis. In 2009, the gross domestic product (GDP) of emerging markets was 1.7%, whereas in advanced countries' GDP was -3.4%. Are they touched by the crisis as strongly as developed nations? Is the Decoupling theory viable during the financial crisis?

Extraits

[...] (2006) International economics Theory and policy 8th ed., International Ed. Boston, MA: Pearson Education, Inc., L'express.fr (2008) La crise touche les pays emergents de plein fouet, L'espress.fr [online] Available at: http://www.lexpress.fr/actualite/economie/la-crise-touche-les-pays- emergents-de-plein-fouet_649822.html?p=3 LATIN AMERICAN AND CARIBBEAN ECONOMIC SYSTEM (1998) The Impact of the Asian Crisis on Latin America [online] Available at: http://www.sela.org/public_html/AA2K/EN/docs/98/spdredi21-98.htm#claanccon Latin American post (2009) Mexico's GDP shrank most in 3 decades, Latin American post [online] Available at: http://www.latinamericanpost.com/index.php?mod=seccion&secc=2&conn=5663 Molano, Walter T. (2009) ‘Brazil: Party On . For Now' Latin Business chronicle [online] Available at: http://www.latinbusinesschronicle.com/app/article.aspx?id=3156 Monex Group financier (2009) - GDP in 2009 Could It Be Any Worse? [...]

[...] Better years followed, but the 1990s have brought back an economic crisis to the emerging countries. The Mexican crisis of 1994-1995, the Asian crisis of 1997-1998, the Russian crisis of 1998, the Brazilian crisis of 1999, the Turkish crisis of 2000, the Argentinean crisis of 2001- 2002 and a new Brazilian crisis of 2002. Each crisis began due to sudden capital movements and speculative attacks against the currencies of emerging countries. Moreover all the foreign financial capital which moved towards these countries before the crisis went back to Western countries which were considered more secure, thus causing another crisis. [...]

[...] According to the statistics of the Trading Economics database website, Colombia is the most affected by the unemployment crisis with a rate of following by Chile and Brazil 9%. From a Keynesian point of view, this high unemployment rate has reduced domestic demand. Here again the decoupling theory does not work, simply because the decrease of domestic demand cannot compensate for the decline in export. Furthermore, the rise in unemployment can be explained by the increase in immigrant workers who have lost their jobs in developed countries and have gone back to their native countries where there are no jobs for them. [...]

[...] However the slowing down of the world economy did not spare emerging countries. What is the future for emerging markets? In 2009 the IMF predicted that emerging countries will recover a healthier economic situation more easily and rapidly than the developed countries. GDP of Emerging markets should attain a level of in 2010 and only for developed countries'”. Indeed, the Subprime crisis had directly touched developed countries and not emerging countries, thus emerging countries are less affected. Moreover, the economic reserve accumulated by emerging countries over the last few years allows them to invest more, in order to re-launch their economy (Izquierdo A., Funaro R. [...]

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