Global Crisis & Developing Countries Presented by: Abbas Haider & Omer Mukhtar Gondal

Introduction The world is in crisis the sources of which lie in financial and other policies of the developed countries

Global crisis and developing countries Investing in toxic or depreciating assets There has been a big drop in funds flowing to developing countries Bond business in emerging markets fell According to Institute of international finance there will be a reverse flow in bank credit

Global crisis and developing countries The FDI flow worldwide is slowing down Exports of developing countries fell drastically Drop in manufactured exports such as electronic products, textile and clothing Commodity exporting developing countries have also been hit by sudden drop in demand and prices Economists commodity dollar index for all items fell by 42%

Global crisis and developing countries For poorer countries such as Africa, the fall in commodity prices was the main mechanism by which global crisis was transmitted to them. Countries like India that benefitted from outsourcing by US multinationals also got affected as the business of western firms shrink Remittances of the migrant workers

Global crisis and developing countries Developing countries are facing a worsening of trade financing as the banks have tightened supply of credit This has reduced exports Deterioration in the balance of payments and foreign reserves IMF help required

Suggestions It would be useful for developing states to prepare to deal with crisis at the national, regional and international level For countries that have fallen into new debt crisis, a new round of debt relief and cancellation is required To prevent countries from falling in debt default, an international debt arbitration system is required. Mechanisms to deal with the instability of demand and prices of exportable commodities

Conclusion!!