Thursday 19 Jul 2018 | 10:47 | SYDNEY
Thursday 19 Jul 2018 | 10:47 | SYDNEY

New economies sink while old institutions rise


Mark Thirlwell

23 October 2008 13:47

So, now we have to add countries to the ever-expanding list of casualties from the financial crisis.  Iceland has been the most famous sovereign victim to date, but a wide range of economies are suffering collateral damage of varying degrees.

Eastern Europe and the Former Soviet Union have been particularly affected: Hungary is under significant pressure, Ukraine is waiting for an IMF bailout, and the Baltics are suffering too. Elsewhere, Argentina (again!) and Pakistan are reportedly facing imminent default. Meanwhile, emerging market banks have been suffering from an ‘Iceland Look-alike contest’, with victims ranging from Kazakhstan to South Korea, while falling oil prices are now denting growth prospects in the Middle East. And even an emerging market powerhouse like China is turning to fiscal pump-priming in order to prop up growth.

One consequence is that, having been largely written off as an irrelevance in recent years, the IMF is now back in the front line of global finance. The Fund is currently discussing packages with a number of countries, including Iceland, Hungary, Pakistan, Ukraine and Belarus.

Staying with the theme of silver-linings for ageing international economic institutions, another thoughtful angle on recent events is provided in this blog post by the CFR’s Brad Setser, explaining why, in the current financial crisis, it's turning out to be  a good thing to be a member of the G7.

Finally, for an interesting view on the likely consequences of the crisis for the balance of power, take a look at this piece by Bill Emmot, which canvasses some potential winners and losers and argues that the current conventional wisdom may be getting this quite wrong.

Photo by Flickr user TW Collins, used under a Creative Commons license.