Global Economic Outlook and Developing Countries: 1998/1999, Written After the Economic Crisis

Author: China Financial and Economic Publishing House
Publisher:
Publish Date: 1999-08-01
Features: Over the past year, the series of events that have dominated the world economic stage is nothing but the economic crisis. In times of global instability, it is crucial for us to understand where the world economy is heading, what factors have led to the current situation, and what we should do to improve our economic prospects and minimize the likelihood of such crises occurring again. This year's Global Economic Prospects and Developing Countries primarily explores the following three issues: the development prospects of developing countries in the face of an economic crisis (Chapter 1), policy responses to the crisis when it occurs (Chapter 2), and future methods to prevent economic crises (Chapter 3).
1. Prospects – The decline in the world economic growth rate from 1998 to 2000 will be more pronounced in developing countries. However, in the long term (2001–2007), if international efforts quickly take action to prevent the worsening of the global crisis, and if developing countries strengthen their financial sectors and enhance reforms, the annual growth rate of the world economy could rise above 3%.
2. Responding to the Crisis – Currently, the primary goals of fiscal and monetary policies are to stimulate aggregate demand, expand the social security system, and mobilize resources to replenish the capital of the financial system without triggering inflation. It is very important that the international community continues to provide financial support.
3. Preventing Crises – Prudent policies are the first line of defense against crises. The liberalization of domestic financial sectors will greatly increase the risks brought by crises, while at the same time, it is essential to accelerate efforts to improve prudent safeguards and banking operations systems. Capital account liberalization should be carried out cautiously, in an orderly manner, and gradually.