The Impact of the Great Recession on Emerging Markets

35 Pages Posted: 1 Feb 2011  

Ricardo Llaudes

International Monetary Fund (IMF)

Ferhan Salman

International Monetary Fund (IMF)

Mali Chivakul

International Monetary Fund (IMF)

Date Written: October 2010

Abstract

This paper examines the impact of the recent global crisis on emerging market economies (EMs). Our cross-country analysis shows that the impact of the crisis was more pronounced in those EMs that had initial weaker fundamentals and greater financial and trade linkages. This effect is observed along a number of dimensions, such as growth, stock market performance, sovereign spreads, and credit growth. This paper also shows that during this crisis, pre-crisis reserve holdings helped to mitigate the initial growth collapse. This finding contrasts with other studies that fail to find a significant relationship between reserves and the growth decline. This paper argues that our preferred measure of impact is a more accurate reflection of the true impact of the crisis on EMs.

Keywords: Credit, Cross country analysis, Economic growth, Economic recession, Emerging markets, Financial crisis, Global Financial Crisis 2008-2009, Reserves, Sovereign debt

Suggested Citation

Llaudes, Ricardo and Salman, Ferhan and Chivakul, Mali, The Impact of the Great Recession on Emerging Markets (October 2010). IMF Working Papers, Vol. , pp. 1-34, 2010. Available at SSRN: https://ssrn.com/abstract=1750726

Ricardo Llaudes

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ferhan Salman

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Mali Chivakul (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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