Contrary to what many economists think, the economic crisis is the worst since the Great Depression, and the downturn has been even more severe in many other parts of the world than in the United States, said Barry Eichengreen, a former senior policy adviser at the International Monetary Fund.
The crisis has highlighted the growing importance of major emerging-market economies, such as Brazil and China, Eichengreen told Bloomberg Markets.
What’s more, the resilience and stockpiles of currency reserves of these economies will make them a “force to be reckoned with” in any debate over global finance, he said.
“This is the first time we’ve had a major global economic slowdown from which they have not suffered disproportionately,” Eichengreen said. “They have skated through as a group more successfully than the advanced countries because their fiscal policies have been stronger. And their regulation of markets has been tighter.”
Eichengreen cited one exception to this: Eastern Europe.
“They have lived beyond their means and now they’re paying the price,” he said.
The determining factor of how much influence an emerging nation will have in shaping global finance is whether it depends on other countries to finance its current account deficit, Eichengreen said.
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