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World Bank: Global Financial Crisis: Implications for South Asia

October 21, 2008

A World Bank report on how the global economic crisis might impact South Asia's growth prospects.

Excerpt: The global financial crisis is hitting South Asia at a time when it is already reeling from the adverse effects of a severe terms-of-trade shock. Countries have responded by partially adjusting domestic fuel prices, cutting development spending and tightening monetary policy. The adverse effects of these terms of trade losses have been substantial, reflected in a slowdown of growth, worsening of macroeconomic balances and huge inflationary pressures.

The global financial crisis will likely worsen these trends, particularly on the growth and balance of payments front. Slowdown in global economy will adversely affect South Asian exports and could hurt income from remittances. Lower foreign capital flows and harder terms will reduce domestic investment. Both will lower growth prospects.

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