According
to the new study by the ADB, the
Global financial markets losses
have reached $50 trillion
(Rs.2.5 Quadrillion or
Rs.2.5 followed by 14 zeroes)
mark. Losses on financial assets
in Developing Asia in 2008
totaled $9.8 trillion. The total
measure of losses includes
reduction in value in Equity and
bond markets including those
backed by mortgages and other
assets and depriciation of many
currencies against the US
Dollar, however it does not
includes the derivative products
like Credit Default Swaps (CDS).
According to data available with
the VMW, the total outstanding
of principle amount of CDS
equals to $50 trillion alone,
and it will further instensify
the total losses. Study shows
the recovery can only now be
contemplate for the late 2009 or
early 2010. Data provide close
connection between the economy
and markets, therefore, the
emerging economies are in mid of
the crisis and the next 12 to 18
months are very crucial.
The good news is that, the South Asia (including Indian Subcontinent - India, Sri Lanka, Afghanistan, Pakistan, Bangladesh, Nepal, Bhutan and Maldives) Economies can weather the current Economic downturn by taking both short term and long term measures to stimulate the domestic demand and their economies.
About ADB
Asian Development Bank was established in 1966 headquartered in Manila, the Philippines. The organization was set up with the aim to reduce poverty in the region and to support the economic growth, environmentally sustainable growth and regional integration. ADB is owned by 67 members and 48 are from the Asian region.
The number of short term measures have been taken to cushion the impact of this crisis. In India, the Government has already announced the three Economic Stimulus Packages to stimulate the economy. Particularly in India and Sri Lanka, there is enough room available for more rate cuts. It means, the expectations from the central bank to brace the economy is still alive. Government could also consider incentives to encourage overseas workers to remit money home, they should also discuss currency swap arrangements and other measures to keep their financial systems stable.
However, in the long term, South Asian nations need to reduce their fiscal deficits, diversify their economies, step up infrastructure investment and boost intra-regional trade to take up the slack of lower demand from G7 nations.
Source: Asian Development Bank and VMW.