## Regional Economic Outlook: Asia and Pacific, May 2009: Global Crisis: The Asian Context

_Asia and Pacific, May 5, 2009_

## Source details

**Canonical URL:** [Regional Economic Outlook: Asia and Pacific, May 2009: Global Crisis: The Asian Context](https://www.imf.org/en/publications/reo/apac/issues/2017/01/07/regional-economic-outlook-asia-and-pacific2)

## Other formats

- [Markdown version](/en/publications/reo/apac/issues/2017/01/07/regional-economic-outlook-asia-and-pacific2/index.md)
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## Bibliographic details
- Published: May 5, 2009
- Series: Asia and Pacific

---

### Overview and Main Findings
- The May 2009 Asia and Pacific REO analyzes the impact of the global financial crisis on Asia.
- Chapter 1: A sustained recovery in Asia will need to await an improvement in the global economy because Asian economies specialize in advanced manufacturing and have increasing financial ties with the rest of the world.
- Chapter 2: Asia has typically not recovered until exports have started to revive.
- Chapter 3: An expansionary policy stance would provide insurance against the risks that a delayed global recovery could hurt the corporate and bank sectors.
- Chapter 4: Japan’s experience during the 1990s may offer useful insights on dealing with the adverse impact of the crisis.

### Recessions, Recoveries, and External Transmission
- Finding: External shocks have rapidly fed through to domestic demand in Asia.
- Finding: A long recovery ahead is anticipated given Asia’s export specialization.
- Empirical emphasis: Past episodes show that recoveries in Asia tend to follow export revivals.

### Corporate Sector Vulnerability and Financial Risks
- Concern: Corporate and bank sectors face risks if the global recovery is delayed.
- Assessment focus: How badly the corporate sector has been hit; default risks; likely default losses; resilience factors for Asia’s corporate sector; how banks will be affected.
- Analytical tools mentioned: Stress testing of the corporate sector; vector autoregressions to analyze transmission of shocks across sectors; micro-level evidence on real macro-financial linkages; computation of banks’ expected losses from corporate sector distress; stress testing corporate balance sheets.

### Lessons from Japan’s Lost Decade
- Background analysis: Stylized facts from Japan’s Lost Decade (1990s).
- Policy areas reviewed: Fiscal policy (did stimulus work?), monetary policy (Bank of Japan’s approach to credit easing), and financial sector policies (resolving Japan’s banking crisis and fiscal costs).
- The report includes summaries of Japan-U.S. parallels and listings of Japan: Key Financial System Reforms, 1996–2003.

### Policy Implications and Recommendations
- Policy stance: The case is made for expansionary policy as insurance against a weak external recovery.
- Specific policy themes:
  - Fiscal stimulus measures and their composition in 2009 and 2010.
  - Financial sector measures to limit spillovers from corporate distress to banks.
  - Monetary and credit-easing measures drawing on historical experience.

### Supporting Materials and Analysis (selected emphases)
- Empirical analysis centers on:
  - The relationship between exports and recoveries in Asia.
  - Corporate default probabilities, expected losses, and implications for bank capital.
  - Historical comparisons with previous recessions since 1980 and detailed timelines for 2008Q4 and earlier episodes.
- Case studies and boxed analyses include:
  - How the crisis affected low-income countries in Asia.
  - The Global Financial Crisis and trade finance in Asia.
  - Housing price risks and potential effects on growth.
  - Financial conditions in key Asian economies.
  - The case for fiscal stimulus.

*International Monetary Fund — Regional Economic Outlook: Asia and Pacific, May 2009*

---

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---

## References

- [Press Release:](https://www.imf.org/external/np/sec/pr/2009/pr09149.htm)
- [Regional Economic Outlooks](https://www.imf.org/external/pubs/ft/reo/reorepts.aspx)
- [World Economic Outlook:](https://www.imf.org/external/pubs/ft/weo/2009/01/index.htm)
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- [Global Economy in Crosscurrents of War and Technology](https://www.imf.org/en/publications/weo/issues/2026/07/08/world-economic-outlook-update-july-2026)
- [https://www.imf.org/en/publications/gfsr](https://www.imf.org/en/publications/gfsr)
- [Global Financial Markets Confront the War in the Middle East and Amplification Risks](https://www.imf.org/en/publications/gfsr/issues/2026/04/14/global-financial-stability-report-april-2026)
- [https://www.imf.org/en/publications/fm](https://www.imf.org/en/publications/fm)
- [Fiscal Policy under Pressure: High Debt, Rising Risks](https://www.imf.org/en/publications/fm/issues/2026/04/15/fiscal-monitor-april-2026)
- [https://www.imf.org/en/publications/reo](https://www.imf.org/en/publications/reo)
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_Source: https://www.imf.org/en/publications/reo/apac/issues/2017/01/07/regional-economic-outlook-asia-and-pacific2_