FINANCIAL markets across the world lost a whopping $50 trillion, including $9.6 trillion in the developing Asian market, says a report by the Asian Development Bank (ADB). Developing Asian countries, which include countries such as China and India, have suffered more than any other emerging markets in the world due to the recent global economic downturn because the region’s markets have expanded much more rapidly, according to a new ADB study, ‘Global Financial Turmoil and Emerging Market Economies: Major Contagion and a Shocking Loss of Wealth’.
“This is by far the most serious crisis to hit the world economy since the Great Depression. While this crisis originated in the US and some European countries, by now no region or country is insulated. I am afraid things may get worse before they get better,” ADB president Haruhiko Kuroda said.
The value of financial assets to GDP rose to 370% of GDP in developing Asia in 2007 from 250% of GDP in 2003. In Latin America, the ratio only rose 30%, with the result that estimated losses on financial assets were a much lower $2.1 trillion, or 57% of GDP. “However, I remain confident that Asia will be one of the first regions to emerge from it, and it will emerge stronger than ever before,” Kuroda added.
Further, ADB said that a recovery can now only be envisaged for late 2009 or early 2010. “Most emerging market economies, including in developing Asia and Latin America, are at a crossroads, and the next 12 to 18 months will be very difficult,” the study stated.