This book is based on the papers presented and discussions held at a high-level regional workshop organized by the Asian Development Bank in January 2010 to discuss the impact of the global economic and financial crisis on developing Asia. It provides a clear and thought-provoking analysis of the global economic crisis from the perspective of 19 Asian countries.

The papers present concrete ways in which Asian economies and financial systems can be made more responsive and resilient. The book proposes that Asian economies can capitalize on the global economic crisis by using it as an opportunity to move from crisis management to gradually assuming global economic leadership. It spells out a general framework for strengthening recovery efforts, ensuring inclusive growth and open regionalism, rebalancing Asia's growth model, and creating greater regional cooperation for a prosperous and resilient Asia.

This is perhaps the first ever book in the market to undertake an in-depth discussion about the impact and the long-term implications of the global financial crisis on economies in Asia.

Impact and Policy Responses: Pakistan and Afghanistan

Impact and policy responses: Pakistan and Afghanistan
ManuBhaskaran and RitwickGhosh


Introduction and Summary

The cumulative effect of the decrease in imports and drying up of foreign investment led to a deterioration in Pakistan's macroeconomic balance leading to a fall in GDP growth from 5.7 percent y/y in 2004/05 to 2.0 percent y/y in 2007/08 and to 3.7 percent y/y in 2008/09 (Table 1.1).1 The government's adoption of an IMF-led stabilization programme in November 2008 and the decline in international oil prices fuelled the recovery process that still continues.

With foreign direct investment and domestic consumption recovering, we believe that the economy is in a position where policy can determine its outcome. However, there are some important assumptions:

  • Inflationary pressures do not return ...
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