Source: Getty
Large industrialized nations like the United States, Japan, and Germany have benefited from increasing global demand for relatively stable economies in which to invest.
Leaders of the G8 nations meeting in L'Aquila Italy acknowledged in a joint statement that there are signs the world economy is stabilizing, but cautioned that "significant risks remain."
Analysis from Carnegie's International Economic Bulletin supports this conclusion, finding that although the preconditions for economic recovery have begun to develop, it is still too early to say that a sustained global recovery is imminent.
The Bulletin explores how the impact of the crisis and the chance for recovery vary in regions around the world, with a particular focus on Africa, Central Asia, China, the Middle East, and Russia. It shows that although the United States is at the epicenter of the global economic crisis, it is one of the countries least affected by the financial fallout. Large industrialized nations like the United States, Japan, and Germany have benefited from increasing global demand for relatively stable economies in which to invest. Instead, it is several developing countries, notably those with vulnerable capital accounts and weak macroeconomic fundamentals, that are experiencing severe economic downturns disproportionate to their roles in the crisis.
| Rank | Country | Currency Depreciation(%) | Equity Market(%) | Bond Spreads(Bps) |
|---|---|---|---|---|
|
1
| Ukraine | -59.9 | -66 | 733 |
|
2
| Argentina | -21.4 | -58 | 735 |
|
3
| Hungary | -18.9 | -58 | 283 |
|
3
| Poland | -35.2 | -53 | 127 |
|
5
| Jamaica | -20.4 | -51 | 439 |
|
6
| Ghana | -28 | -35 | 448 |
|
7
| Russia | -22 | -44 | 144 |
|
8
| Kazakhstan | -26 | -34 | 167 |
|
9
| Bulgaria | -1.5 | -51 | 175 |
|
10
| Mexico | -22.6 | -35 | 73 |
| * The difference between a country's bond interest rate and the interest rate on the U.S. treasury bond. The higher the number, the less confidence there is that a country can repay its loan. | ||||
Both rankings were determined by comparing currency devaluations, equity market declines, and rising sovereign bond spreads because these measures tend to track developments in the real economy during times of economic crisis when financial strain handicaps consumption, investment, and in many cases government spending, which limits GDP and employment growth.
| Rank | Country | Currency Depreciation(%) | Equity Market(%) | Bond Spreads(Bps) |
|---|---|---|---|---|
|
1
| China | 0.3 | -11 | -31 |
|
2
| Japan | 9.2 | -17 | -5 |
|
3
| United States | 0 | -24 | 0 |
|
3
| South Africa | 1.5 | -20 | 39 |
|
5
| Peru | -0.4 | -15 | 42 |
|
6
| Philippines | -0.1 | -21 | 53 |
|
7
| Malaysia | -0.9 | -12 | 81 |
|
8
| Germany | -1.2 | -34 | 0 |
|
9
| Colombia | -3.4 | -10 | 63 |
|
10
| France | -1.2 | -34 | 11 |
| * The difference between a country's bond interest rate and the interest rate on the U.S. treasury bond. The higher the number, the less confidence there is that a country can repay its loan. | ||||
The economic crisis has shown that even when a crisis originates in industrialized countries, developing countries pay the highest price and underlines why developing countries have a crucial interest in the financial soundness of large economies like the United States. This helps explain why the G20, rather than the G8, is leading the effort to design a regime to govern international finance. Or that Brazil, Russia, India, and China (the BRICs) organized their first summit to discuss, among other things, the role of the dollar as its reserve currency.
Former Senior Associate, International Economics Program
Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.
Lauren Falcão
Former Junior Fellow, Trade, Equity, and Development Program
Shimelse Ali
Carnegie India does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
This piece examines India’s response to U.S. sanctions and tariffs, specifically assessing the immediate market consequences, such as alterations in import costs, and the broader strategic implications for India’s energy security and foreign policy orientation.
Vrinda Sahai
This paper examines the evolution of India-China economic ties from 2005 to 2025. It explores the impact of global events, bilateral political ties, and domestic policies on distinct spheres of the economic relationship.
Santosh Pai
The India-U.S. relationship currently appears buffeted between three “Ts”—TRUST, Tariffs, and Trump.
Arun K. Singh
This article argues that the geopolitical circumstances have never been more conducive, not merely for the early conclusion of the free trade agreement (FTA) between India and the EU, but also for crafting a substantive and comprehensive strategic partnership.
Mohan Kumar
President Kais Saied has won a second term in office, but his country is facing a host of problems that necessitate urgent reforms, above all preventing the possibility of a financial meltdown.
Ishac Diwan, Hachemi Alaya, Hamza Meddeb
