Contents -- Foreword -- Acknowledgments -- Selected Abbreviations -- Overview -- The global recession has deepened -- Private capital flows are shrinking at an unprecedented rate -- Financing conditions have deteriorated rapidly -- Building confidence and strengthening policy coordination are critical to recovery and long-term growth -- The damage to low-income countries from the crisis must be mitigated -- Chapter 1 Prospects for the Global Economy -- Immediate impacts of the crisis -- Global growth -- Commodity markets -- Exchange rates and inflation -- Policy reactions -- External balance and vulnerabilities -- An uncertain medium-term outlook -- Regional outlooks -- Risks -- Policy challenges -- Notes -- References -- Chapter 2 Private Capital Flows in a Time of Global Financial Turmoil -- The global financial crisis severely reduced private capital flows to developing countries in 2008 -- The downturn began in late 2008, as part of the global financial crisis -- Remittance flows began to slow down in 2008 -- Prospects: The fall in private capital flows will continue in 2009 -- Annex 2A: Methodology for assessing trends in foreign direct investment -- Annex 2B: Liquidity problems, bank solvency, and international bank lending to developing countries -- Annex 2C: Debt Restructuring with Official Creditors -- Agreements with countries -- Notes -- References -- Chapter 3 Charting a Course Ahead -- Corporations in developing countries face severe financing difficulties -- Countries with large financing needs face balance-of-payments crises -- The potential for expansionary policies varies significantly among developing countries -- The financial crisis has increased the importance of policy coordination -- Annex 3A: Modeling the benefits of a coordinated regulatory response to common shocks to confidence.

Annex 3B: A framework for measuring investor confidence -- Notes -- References -- Appendix: Regional Outlooks -- East Asia and Pacific -- Europe and Central Asia -- Latin America and the Caribbean -- The Middle East and North Africa -- South Asia -- Sub-Saharan Africa -- Notes -- Boxes -- 1.1 Recent initiatives to bolster trade finance -- 1.2 Managing the recovery: Coping with the future impact of recent policies -- 1.3 Potential economic impacts of the A H1N1 flu outbreak -- 2.1 The impact of the current financial crisis has been much deeper and broader than previous crises -- 2.2 The composition of foreign direct investment in times of crisis in the host economies -- 2.3 Bank lending in developing countries and the presence of foreign banks -- 3.1 Foreign bank participation and the financial crisis -- 3.2 Methodology used to estimate external financing gaps -- 3.3 The response of international financial institutions to the trade finance contraction following the crisis -- 3.4 The origins of the financial crisis -- Figures -- 1.1 The crisis shook confidence worldwide and resulted in a large decline in global wealth -- 1.2 Stock market wealth declined by 40 to 60 percent in dollar terms -- 1.3 Increased uncertainty caused households and firms to delay purchases of durable and investment goods -- 1.4 Capacity is being underutilized throughout the world -- 1.5 Reflecting increased precautionary saving, industrial production declined sharply -- 1.6 The sharp fall in commodity prices has now stabilized -- 1.7 Oil demand has fallen sharply along with global growth -- 1.8 Falling food and energy prices to bring inflation under control -- 1.9 Policy interest rates in both high-income and developing countries have been sharply reduced -- 1.10 The contraction in bank lending has been limited.

1.11 Much weaker industrial production and exports will cut deeply into government revenues in developing countries -- 1.12 Government balances are expected to deteriorate most sharply in Europe and Central Asia -- 1.13 The crisis has reduced global imbalances -- 1.14 Many developing-country reserves have reached worrisomely low levels -- 1.15 Many countries will need to reduce imports sharply due to reduced access to foreign capital -- 1.16 Despite projected stronger growth, considerable excess capacity remains even in 2011 -- 1.17 The recovery in East Asia and Pacific will be led by China -- 1.18 High short-term debt-to-reserves ratio in Europe and Central Asia -- 1.19 GDP growth deteriorated markedly in the fourth quarter of 2008 in several major economies in Latin America and the Caribbean -- 1.20 Growth to slow sharply for both oil and diversified exporters in the Middle East and North Africa -- 1.21 Government revenues in South Asia very dependent on trade -- 1.22 Economic growth in Sub-Saharan Africa is projected to decelerate abruptly in 2009 to the lowest level in almost a decade -- 2.1 Net private capital inflows to developing countries, 2000-08 -- 2.2 Net private capital inflows to developing regions, 2007-08 -- 2.3 MSCI equity index from January 2007-February 2009 -- 2.4 Declines in developing-country stock markets in 2008 -- 2.5 Gross equity issuance by developing countries, 2006-08 -- 2.6 IPO activities in developing countries, 2006-08 -- 2.7 Emerging market bond spreads widened sharply at year's end, 2003-09 -- 2.8 Bond spreads widened in all asset classes in 2008 -- 2.9 Deteriorating credit quality for emerging markets in 2008 -- 2.10 Sovereign five-year credit default swap spreads, July 2008-February 2009 -- 2.11 Bond issuance by developing-country governments and firms, January-February 2009.

2.12 Short-term debt flows to developing countries, 2007Q1-2008Q4 -- 2.13 Spreads on trade finance credit spiked in 2008 -- 2.14 Syndicated bank lending to developing countries, January 2008-April 2009 -- 2.15 Quarterly FDI inflows to selected developing countries dipped in 2008 -- 2.16 Distribution of income from FDI in selected economies, 2007Q1-2008Q3 -- 2.17 Repatriation of assets by financial firms from selected developing countries, 2001-08 -- 2.18 Cross-border M&A flows to developing regions, 2007Q1-2009Q1 -- 2.19 Net private capital flows as a share of GDP in developing countries, 1970-2010 -- 2.20 International banks' claims on emerging markets, 2004-08 -- 2.21 Major international banks with cross-border lending exposure to at least 30 developing countries, 1993-2007 -- 2B.1 Three-month LIBOR-OIS spread, July 2007-April 2009 -- 2B.2 Five-year CDS sector index for banks in the United States and European Union, January 2007-April 2009 -- 3.1 Gross external borrowing by developing country corporations, 1998-2008 -- 3.2 Spreads on emerging market corporate bonds, February 2007-April 2009 -- 3.3 Largest local-currency bond markets, 2007 -- 3.4 Pension assets in selected countries as a share of GDP, 2007 -- 3.5 Corporate bond issuance in domestic markets, 2004Q1-2009Q1 -- 3.6 Foreign holdings of domestic bonds, 2007 -- 3.7 External financing needs of developing countries, 1990-2009 -- 3.8 Estimated external financing needs of 102 developing countries in 2009 -- 3.9 Equity price changes versus external financing needs of developing countries, August 2008-February 2009 -- 3.10 Exchange-rate changes and external financing needs in developing countries, August 2008-February 2009 -- 3.11 Change in sovereign bond spreads and external financing needs of developing countries, August 2008-February 2009 -- 3.12 External financing needs in 2009, by region.

3.13 External financing gaps in 2009, by region and under alternative scenarios -- 3.14 Real GDP growth in five Asian countries, 1996-98 -- 3.15 Net ODA disbursements by DAC donors, 1991-2008 -- 3.16 Policy interest rates in developing countries, January 2007-March 2009 -- 3.17 Growth of foreign reserves in developing countries, 1996-98 and 2006-08 -- 3.18 Fiscal stimulus measures by G-20 developing countries -- 3.19 Developing countries with fiscal deficits exceeding 3 percent of GDP at the onset of the financial crisis -- 3A.1 Record volatility in the global equity, credit, commodity, and foreign exchange markets, May 2007-April 2009 -- 3A.2 Correlation of authors' composite global index of consumer confidence with State Street index of investor confidence -- A.1 East Asia and Pacific production dropped sharply but shows signs of bottoming out -- A.2 China is key to East Asian prospects -- A.3 Output declined rapidly in the fourth quarter of 2008 -- A.4 Financial crisis increased the price of risk -- A.5 High short-term debt to total reserves ratios in Europe and Central Asia -- A.6 Lower commodity prices should see inflation decline -- A.7 Improved initial conditions are helping Latin America and the Caribbean weather the crisis -- A.8 EMBI sovereign spreads surged as the crisis shook investors' confidence -- A.9 Economic conditions in Latin America and the Caribbean have deteriorated sharply -- A.10 Sharply weaker investment growth has contributed to GDP slowdown -- A.11 Output and current account balances will deteriorate in 2009, improving only modestly in 2010 -- A.12 Middle East and North Africa oil revenues hit hard by global recession in 2009 -- A.13 Middle East and North Africa bourses hit hard at the worst of financial crisis -- A.14 Remittances, FDI and tourism revenues decline as a share of GDP.

A.15 JP Morgan Emerging Market Bond Index (EMBI), stripped spreads.