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Issue Guide: South Asia and the Global Financial Crisis

May 2009


India, South Asia's economic powerhouse, saw sharply reduced economic growth during the course of the crisis, in part due to reduced demand for Indian exports from major importers like Western Europe and the United States. As a result, the Indian stock market was severely hit, with major indices losing well over 50 percent of their values. The Indian financial sector, however, remained relatively isolated and saw little direct impact from the financial turmoil in many parts of the industrialized world. Lobbying internationally ahead of April 2009 G-20 summit meetings, India pressed for trade openness, and particularly for trade-financing outlays--which world leaders did commit to at the summit. Regionally, experts feared the crisis could foment further turmoil in Pakistan, India's neighbor. Should rising Pakistani debt make the country's government less able to control extremism, they said, the result could be security problems, and potentially economic problems for India and other South Asian countries. These fears were underlined by the late 2008 terrorist attacks in Mumbai, which India's government said were linked to Pakistan. In late March 2009, the IMF approved a loan of $847 million to Pakistan.

The following is a list of resources offering background on South Asian economies and analysis on how they might fare in the downturn.

Pre-Crisis Conditions

Optimists and Pessimists

Economics and Politics

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