As the financial crisis intensifies, the effects of the financial turmoil increase in step, with most of the countries left unaffected. People worry about the emerging economies and the developing countries for they are new and vulnerable to the global financial storm. However, besides fear, there are still hopes for them.
Many industrialized nations are more experienced to tackle the economic slowdown for they have drawn lessons from the crisis in 1980s and 90s. On one hand, the effective macro economic policies offset their vulnerability and sovereign debts in these countries get better management; and moreover, many countries also come up with a flexible exchange rate, which can reduced the impact of rate adjustment. On the other hand, the financial crisis alleviates the pressure from inflation, greatly changes the expectations and reduces the burden of some developing countries. Policy intervention, effective management in financial institutions as well as relatively low commodity price also help to reduce the impact of the crisis.
The investment heat by developing countries has created great demand and brought quick expansion of global economy in the past ten years. Whether some industrialized nations can avoid deflation and recession depends on whether they can maintain such a growth momentum. Though concrete measures have been taken, the global economy still likely falls into a victim of deflation if the credit crisis can not be solved immediately.
The standard monetary policies will bring different results in the developed countries. The fiscal stimulus plan adopted worldwide fundamentally serves as a crucial way to end the global economic recession. The developed countries can shake off recession by investing in infrastructure in developing countries as to boost demand.
Due to the worsening financial crisis, world leaders unanimously agree and support the Bretton Woods system, which could turn crisis into opportunities with multilateral actions and stresses the importance of wisdom, policy and political will. The multilateral framework that came into being after the WWII could not satisfy the growing global demand in the 21st century. World Bank president Robert B. Zoellick said we needed a flexible and effective new multilateralism that included industrialized nations, emerging economies as well as developing countries to meet the demand of the new age. The new international multilaterism should be an effective organization that respects national sovereignty and promote cooperation.
China has greatly alleviated the poverty thanks to the robust economic development in the past 30 years. As the global financial slowdown intensifies, the world places high hopes on China. The road lying ahead is difficult and the economy in China has already showed signs of recession. However, China did not suffer too much from global banking crisis thanks to sufficient foreign exchange reserves and fiscal surplus. China makes great contributions to global economic development by maintaining fast growth at this critical moment when world economy is off the path of solid growth.
By People's Daily Online