• Financial crises and recovery
• Global financial crisis
• Exchange rates and currency crises
• Regional crisis and recovery
• Financial architecture reform

Financial crises and recovery

Developing countries facing higher borrowing costs, lower credit levels, and reduced international capital flows. 2010's Global Economic Prospects report examines the consequences of the financial crisis on both the short- and medium-term growth prospects of developing countries.  Although global growth has resumed, the recovery is fragile, and unless business and consumer demand strengthen, the world economy could slow down again.

It concludes:

• overall, after falling for two to three quarters, global GDP has begun recovering; output grew rapidly during the second half of 2009 and is expected to continue to do so during the first half of 2010
• however, as the positive contribution to growth from fiscal stimulus and the inventory cycle wanes, growth will slow, in part because spending by households and the banking sector will be less buoyant as they rebuild their balance sheets
• the crisis and the regulatory reaction to the financial excesses of the preceding several years may have lasting impacts on financial markets, raising borrowing costs and lowering levels of credit and international capital flows
• the rate of growth of potential output in developing countries may be reduced by between 0.2 and 0.7 percentage points annually over the next five to seven years as economies adjust to tighter financial conditions
• the level of potential output in developing countries could be reduced by between 3.4 and 8 percent over the long run, compared with its pre-crisis path
• a weak recovery is anticipated in developing countries. Arguably the inventory cycle is somewhat more advanced in East Asia and the Pacific, and there are signs that the growth impact of fiscal stimulus in China may already be waning
• the pace of the recovery is expected to be most subdued in the Europe and Central Asia region, partly because the pre-crisis level of demand in the region was well above potential and partly because the financial system in the region has been more acutely affected by the crisis
• the financial crisis has taken its toll on achieving the 2015 poverty Millennium De­velopment Goal (MDG). Newly updated World Bank estimates suggest that the crisis will leave an additional 64 million people in extreme poverty in 2009 and some 50 million in 2010 relative to a no crisis scenario.

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