PHA-Exch> Swimming Against the Tide: How Developing Countries are Coping with the Global Crisis

[Claudio Schuftan]

From: Ruggiero, Mrs. Ana Lucia (WDC) <ruglucia at paho.org>
crossposted from: EQUIDAD at listserv.paho.org


 *SWIMMING AGAINST THE TIDE:
HOW DEVELOPING COUNTRIES ARE COPING WITH THE GLOBAL CRISIS*


*Background Paper prepared by World Bank Staff for the G20 Finance Ministers
and Central*

Bank Governors Meeting, Horsham, United Kingdom on March 13-14, 2009



Available online PDF [21p.] at:
http://siteresources.worldbank.org/NEWS/Resources/swimmingagainstthetide-march2009.pdf





*“…..Impact on the Poor and Most Vulnerable- What does this mean for the
poor? *The economic crisis is projected to increase poverty by around 46
million people in 2009. The principal transmission channels will be via
employment and wage effects as well as declining remittance flows. While
labor markets in the developing world will take a while to experience the
full effects of the on-going global contraction, there is already clear
evidence of the fall-out.



The latest estimates from the Ministry of Labor in China show 20 million
people out of work. So far, the most affected sectors appear to be those
that had been the most dynamic, typically urban-based exporters,
construction, mining and manufacturing. The *garment industry *has laid off
30,000 workers in Cambodia (10% of workforce) where it represents the only
significant export industry. In *India, *over 500,000 jobs have been lost
over the last 3 months of 2008 in export-oriented sectors—i.e., gems and
jewelry, autos, and textiles. ILO forecasts suggest that global job losses
could hit 51 million, and up to 30 million workers could become unemployed.

*
“….Workers are increasingly shifting out of dynamic export-oriented sectors
*into lower productivity activities (and moving from urban back into rural
areas). These trends are likely to jeopardize recent progress in growth and
poverty reduction resulting from labor shifting to higher return activities.


*
*Declining remittances and migration opportunities are also undermining
poverty gains and depressing wages.


Falling real wages and employment impede households’ ability to provide
adequate food and necessities* *to their members

*
“….Experience from past crises suggests the potential for a slowdown in
progress towards the MDGs *(Figure 7). Even prior to the crisis, most human
development MDGs—especially for child and maternal mortality but also
primary school completion, nutrition, and sanitation—were unlikely to be
met…..’



*“…..Protecting the Vulnerable**. *Inevitably, the crisis will impact social
and human development objectives. Declining growth rates combined with high
levels of initial poverty leave many households in developing countries
highly exposed to the crisis. The Bank estimates that of 116 developing
countries, 94 have experienced decelerating growth, of which 43 experience
high levels of poverty. This implies new spending needs and may warrant a
re-prioritization of existing public spending….”



*World Bank: Financial Crisis website: *
http://www.worldbank.org/html/extdr/financialcrisis/* *

* *

*Policy Note: Vulnerable Countries Brief *

*The Global Economic Crisis:*

*Assessing Vulnerability with a Poverty Lens*

This policy note was prepared by Louise Cord, Marijn Verhoeven, Camilla
Blomquist and Bob Rijkers

* *

‘…..Almost all developed and developing countries are suffering from the
global economic crisis. While developed countries are experiencing some of
the sharpest contractions, households in developing countries are much more
vulnerable and likely to experience acute negative consequences in the
short- and long-term. Declining growth rates combined with high levels of
initial poverty leave many households in developing countries highly exposed
to the crisis. Vulnerability is heightened if, at the same time, governments
are constrained in cushioning the impacts due limited institutional capacity
and fiscal resources….”

PDF:
http://siteresources.worldbank.org/NEWS/Resources/WBGVulnerableCountriesBrief.pdf
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