Developments_NN2 in_II the_AT Global_JJ Economy_NN1 and_CC Financial_JJ Markets_NN2 On_II the_AT heels_NN2 of_IO a_AT1 major_JJ financial_JJ crisis_NN1 that_CST originated_VVD in_II advanced_JJ country_NN1 markets_NN2 in_II 2007_MC ,_, the_AT global_JJ economy_NN1 sank_VVD in_II 2008_MC -_- 09_MC into_II the_AT deepest_JJT recession_NN1 since_CS World_NN1 War_NN1 II_MC ._. 
Although_CS the_AT IMF_NP1 's_GE 2008_MC Annual_JJ Report_NN1 had_VHD highlighted_VVN the_AT risks_NN2 from_II the_AT spreading_JJ financial_JJ crisis_NN1 ,_, the_AT crisis_NN1 advanced_VVD further_RRR and_CC faster_RRR during_II 2009_MC than_CSN expected_JJ ,_, despite_II strong_JJ policy_NN1 efforts_NN2 in_II key_JJ economies_NN2 ._. 
Emerging_JJ markets_NN2 and_CC low-income_JJ countries_NN2 ,_, which_DDQ had_VHD been_VBN relatively_RR sheltered_VVN from_II financial_JJ strains_NN2 owing_II21 to_II22 their_APPGE limited_JJ exposure_NN1 to_II U.S._NP1 mortgage-related_JJ assets_NN2 ,_, were_VBDR drawn_VVN into_II the_AT storm_NN1 ,_, as_CSA international_JJ credit_NN1 markets_NN2 ,_, trade_NN1 finance_NN1 ,_, and_CC many_DA2 foreign_JJ exchange_NN1 markets_NN2 also_RR came_VVD under_II heavy_JJ pressure_NN1 ._. 
This_DD1 heightened_JJ financial_JJ stress_NN1 led_VVN to_II an_AT1 unprecedented_JJ contraction_NN1 in_II global_JJ output_NN1 and_CC trade_NN1 in_II financial_JJ year_NNT1 2009_MC and_CC was_VBDZ transmitted_VVN through_II a_AT1 range_NN1 of_IO channels_NN2 ._. 
The_AT ramifications_NN2 from_II the_AT credit_NN1 crunch_NN1 and_CC the_AT sharp_JJ drop_NN1 in_II asset_NN1 prices_NN2 were_VBDR quickly_RR passed_VVN on_RP through_II banking_NN1 systems_NN2 to_II many_DA2 sectors_NN2 and_CC countries_NN2 in_II the_AT global_JJ economy_NN1 and_CC were_VBDR magnified_VVN by_II the_AT collapse_NN1 of_IO consumer_NN1 and_CC business_NN1 confidence_NN1 ._. 
Wide-ranging_JJ and_CC sometimes_RT unorthodox_JJ policy_NN1 responses_NN2 made_VVD some_DD progress_NN1 in_II stabilizing_VVG markets_NN2 in_II financial_JJ year_NNT1 2009_MC ,_, although_CS they_PPHS2 were_VBDR not_XX able_JK to_TO arrest_VVI the_AT circle_NN1 of_IO negative_JJ feedback_NN1 between_II intensifying_VVG financial_JJ strains_NN2 and_CC weakening_VVG activity_NN1 ._. 
Economic_JJ activity_NN1 and_CC merchandise_NN1 trade_NN1 plummeted_VVD in_II the_AT last_MD quarter_NN1 of_IO 2008_MC across_II all_DB markets_NN2 and_CC continued_VVD to_TO fall_VVI rapidly_RR in_II early_RR 2009_MC ._. 
Global_JJ GDP_NN1 contracted_VVD by_RP over_RG 6_MC percent_NNU (_( annualized_JJ )_) in_II the_AT fourth_MD quarter_NN1 of_IO 2008_MC and_CC the_AT first_MD quarter_NN1 of_IO 2009_MC ._. 
Advanced_JJ economies_NN2 suffered_VVD considerably_RR from_II financial_JJ strains_NN2 and_CC the_AT deterioration_NN1 in_II housing_VVG markets_NN2 ._. 
In_II emerging_JJ markets_NN2 in_II Europe_NP1 and_CC the_AT Commonwealth_NN1 of_IO Independent_JJ States_NN2 ,_, which_DDQ had_VHD been_VBN relying_VVG heavily_RR on_II capital_NN1 inflows_NN2 to_II fuel_NN1 growth_NN1 ,_, significant_JJ damage_NN1 was_VBDZ inflicted_VVN early_RR through_II financial_JJ channels_NN2 ._. 
Countries_NN2 that_CST relied_VVD heavily_RR on_II manufacturing_NN1 exports_NN2 ,_, like_II those_DD2 in_II East_ND1 Asia_NP1 ,_, Japan_NP1 ,_, Germany_NP1 ,_, and_CC Brazil_NP1 ,_, were_VBDR battered_VVN by_II falling_VVG demand_NN1 in_II export_NN1 markets_NN2 ._. 
Countries_NN2 in_II Africa_NP1 ,_, Latin_JJ America_NP1 ,_, and_CC the_AT Middle_JJ East_ND1 suffered_VVN from_II plummeting_JJ commodity_NN1 prices_NN2 ,_, drop_VV0 in_II demand_NN1 for_IF exports_NN2 ,_, and_CC lower_JJR remittances_NN2 and_CC foreign_JJ capital_NN1 inflows_NN2 ._. 
Indeed_RR ,_, a_AT1 sharp_JJ correction_NN1 in_II the_AT third_MD quarter_NN1 of_IO 2008_MC brought_VVD an_AT1 end_NN1 to_II the_AT commodity_NN1 price_NN1 boom_NN1 ._. 
The_AT IMF_NP1 commodity_NN1 price_NN1 index_NN1 declined_VVN by_II almost_RR 55_MC percent_NNU during_II the_AT second_MD half_NN1 of_IO 2008_MC ._. 
This_DD1 sharp_JJ drop_NN1 in_II commodity_NN1 prices_NN2 mainly_RR reflected_VVD the_AT adverse_JJ effect_NN1 of_IO the_AT global_JJ slowdown_NN1 on_II the_AT demand_NN1 for_IF commodities_NN2 ._. 
In_RR21 particular_RR22 ,_, the_AT sharper-than-expected_JJR downturn_NN1 in_II emerging_VVG and_CC less-developed_JJR economies_NN2 in_II mid-2008_MC --_NN1 which_DDQ had_VHD accounted_VVN for_IF most_DAT of_IO the_AT incremental_JJ demand_NN1 during_II the_AT boom_NN1 --_NN1 was_VBDZ a_AT1 key_JJ factor_NN1 explaining_VVG the_AT drop_NN1 in_II commodity_NN1 prices_NN2 ._. 
Prices_NN2 broadly_RR stabilized_VVD at_II the_AT end_NN1 of_IO 2008_MC ._. 
Commodities_NN2 closely_RR tied_VVN to_II manufacturing_NN1 of_IO capital_NN1 goods_NN2 were_VBDR affected_VVN the_AT most_RRT ,_, while_CS commodities_NN2 with_IW a_AT1 lower_JJR income_NN1 elasticity_NN1 of_IO demand_NN1 ,_, like_II food_NN1 ,_, experienced_VVD a_AT1 milder_JJR price_NN1 decline_NN1 ._. 
In_II most_DAT areas_NN2 of_IO the_AT world_NN1 ,_, inflation_NN1 pressures_NN2 subsided_VVD rapidly_RR ,_, and_CC rising_VVG economic_JJ slack_NN1 contained_VVD price_NN1 pressures_NN2 ._. 
Headline_VV0 inflation_NN1 in_II advanced_JJ economies_NN2 fell_VVD below_II 1_MC1 percent_NNU in_II early_RR 2009_MC ._. 
Inflation_NN1 moderated_VVD significantly_RR in_II the_AT emerging_JJ economies_NN2 ,_, although_CS in_II some_DD cases_NN2 ,_, depreciating_VVG exchange_NN1 rates_NN2 moderated_VVD the_AT downward_JJ momentum_NN1 ._. 
Against_II this_DD1 background_NN1 ,_, national_JJ and_CC international_JJ policy_NN1 initiatives_NN2 were_VBDR undertaken_VVN to_TO spur_VVI a_AT1 coordinated_JJ policy_NN1 response_NN1 to_TO stabilize_VVI the_AT financial_JJ system_NN1 ._. 
The_AT IMF_NP1 ,_, together_RL with_IW the_AT World_NN1 Bank_NN1 and_CC regional_JJ development_NN1 banks_NN2 ,_, played_VVD a_AT1 useful_JJ role_NN1 by_II providing_VVG more_RGR front-loaded_JJ financing_NN1 and_CC streamlined_JJ conditionality_NN1 ._. 
The_AT Fund_NN1 took_VVD actions_NN2 to_TO modernize_VVI its_APPGE lending_NN1 toolkit_NN1 (_( see_VV0 Chapter_NN1 3_MC )_) ,_, including_II instituting_VVG the_AT new_JJ Flexible_JJ Credit_NN1 Line_NN1 ,_, to_TO revamp_VVI the_AT conditions_NN2 on_II program_NN1 loans_NN2 and_CC to_TO expand_VVI its_APPGE lending_NN1 capacity_NN1 ._. 
Advanced_JJ Economies_NN2 The_AT situation_NN1 in_II advanced_JJ economies_NN2 deteriorated_VVD rapidly_RR after_II the_AT default_NN1 in_II September_NPM1 2008_MC of_IO a_AT1 large_JJ U.S._NP1 investment_NN1 bank_NN1 (_( Lehman_NP1 Brothers_NN2 )_) ,_, public_JJ support_NN1 for_IF the_AT largest_JJT U.S._NP1 insurance_NN1 company_NN1 (_( AIG_NP1 )_) ,_, and_CC intervention_NN1 in_II a_AT1 range_NN1 of_IO other_JJ systemic_JJ institutions_NN2 in_II the_AT United_NP1 States_NP1 and_CC Europe_NP1 ._. 
These_DD2 events_NN2 put_VVN in_II doubt_NN1 the_AT solvency_NN1 of_IO many_DA2 established_JJ financial_JJ institutions_NN2 ._. 
As_II a_AT1 result_NN1 ,_, wholesale_JJ funding_NN1 evaporated_VVD ,_, external_JJ debt_NN1 markets_NN2 closed_VVD ,_, and_CC a_AT1 disorderly_JJ deleveraging_NN1 ensued_VVN across_II the_AT rest_NN1 of_IO the_AT global_JJ financial_JJ system_NN1 ._. 
Gross_JJ global_JJ capital_NN1 flows_NN2 contracted_VVD ,_, with_IW flows_NN2 favoring_VVG countries_NN2 with_IW more_DAR liquid_NN1 ,_, safe-haven_JJ markets_NN2 ._. 
Consequently_RR ,_, the_AT U.S._NP1 dollar_NNU1 and_CC the_AT yen_NN appreciated_VVD sharply_RR in_II real_JJ effective_JJ terms_NN2 in_II the_AT second_MD half_NN1 of_IO 2008_MC ,_, while_CS the_AT euro_NN1 remained_VVD broadly_RR stable_JJ ._. 
Financial_JJ markets_NN2 had_VHD stabilized_VVN by_II late_JJ 2008_MC ,_, but_CCB remained_VVD under_II stress_NN1 during_II the_AT remainder_NN1 of_IO financial_JJ year_NNT1 2009_MC ._. 
Many_DA2 equity_NN1 markets_NN2 remained_VVD down_RP by_II more_DAR than_CSN 40_MC percent_NNU from_II their_APPGE peaks_NN2 ._. 
After_CS years_NNT2 of_IO building_VVG up_RP record_NN1 levels_NN2 of_IO debt_NN1 ,_, financial_JJ institutions_NN2 and_CC households_NN2 began_VVD the_AT painful_JJ process_NN1 of_IO reducing_VVG leverage_NN1 ._. 
This_DD1 was_VBDZ driven_VVN by_II mounting_VVG bank_NN1 write-downs_NN2 as_CSA credit_NN1 quality_NN1 deteriorated_VVD and_CC also_RR by_II the_AT reversal_NN1 of_IO intertemporal_JJ savings_NN2 choices_NN2 made_VVN by_II households_NN2 and_CC some_DD corporates_NN2 ._. 
Many_DA2 elements_NN2 of_IO the_AT "_" shadow_NN1 banking_NN1 system_NN1 "_" that_CST were_VBDR predicated_VVN on_II high_JJ leverage_NN1 began_VVD the_AT process_NN1 of_IO being_VBG unwound_VVN ._. 
Financial_JJ pressures_NN2 from_II this_DD1 deleveraging_JJ cycle_NN1 were_VBDR widespread_JJ and_CC persistent_JJ ,_, reflecting_VVG the_AT damaging_JJ feedback_NN1 loop_NN1 with_IW the_AT real_JJ economy_NN1 ._. 
As_CSA output_NN1 contracted_VVD ,_, the_AT risk_NN1 of_IO rising_VVG corporate_JJ and_CC household_NN1 defaults_NN2 in_II turn_NN1 widened_VVD credit_NN1 spreads_VVZ and_CC increased_JJ credit-related_JJ losses_NN2 on_II banks_NN2 '_GE balance_NN1 sheets_NN2 ._. 
In_II the_AT fourth_MD quarter_NN1 of_IO 2008_MC ,_, advanced_JJ economies_NN2 experienced_VVD an_AT1 unprecedented_JJ output_NN1 decline_NN1 of_IO 70_MC percent_NNU (_( annualized_JJ )_) ._. 
The_AT policy_NN1 responses_NN2 during_II the_AT year_NNT1 were_VBDR rapid_JJ and_CC comprehensive_JJ but_CCB were_VBDR not_XX successful_JJ at_II arresting_VVG the_AT downward_JJ spiral_NN1 ._. 
Country_NN1 authorities_NN2 followed_VVD multifaceted_JJ strategies_NN2 involving_VVG continued_JJ provision_NN1 of_IO liquidity_NN1 ,_, extended_VVD guarantees_NN2 of_IO bank_NN1 liabilities_NN2 ,_, injection_NN1 of_IO public_JJ funds_NN2 for_IF bank_NN1 capitalization_NN1 ,_, and_CC programs_NN2 to_TO deal_VVI with_IW distressed_JJ assets_NN2 ._. 
However_RR ,_, some_DD of_IO these_DD2 policies_NN2 ,_, particularly_RR regarding_II the_AT treatment_NN1 of_IO impaired_JJ assets_NN2 ,_, lacked_VVD detail_NN1 ,_, as_CSA they_PPHS2 were_VBDR rushed_VVN ,_, and_CC thus_RR at_RR21 first_RR22 did_VDD not_XX adequately_RR reduce_VVI uncertainty_NN1 about_II distressed_JJ assets_NN2 ._. 
Central_JJ banks_NN2 used_VVD conventional_JJ and_CC unconventional_JJ policy_NN1 tools_NN2 to_TO ease_VVI credit_NN1 market_NN1 conditions_NN2 and_CC reduced_JJ policy_NN1 rates_NN2 to_II unprecedented_JJ lows_NN2 ,_, but_CCB still_RR overall_JJ credit_NN1 growth_NN1 contracted_VVD ._. 
Large_JJ discretionary_JJ fiscal_JJ stimulus_NN1 packages_NN2 were_VBDR introduced_VVN in_II China_NP1 ,_, Germany_NP1 ,_, Japan_NP1 ,_, Korea_NP1 ,_, the_AT United_NP1 Kingdom_NP1 ,_, and_CC the_AT United_NP1 States_NP1 ._. 
However_RR ,_, the_AT impact_NN1 from_II increased_JJ spending_NN1 will_VM mostly_RR be_VBI felt_VVN in_II late_JJ 2009_MC and_CC 2010_MC ._. 
In_II the_AT United_NP1 States_NP1 ,_, the_AT biggest_JJT financial_JJ crisis_NN1 since_CS the_AT Great_JJ Depression_NN1 pushed_VVD the_AT country_NN1 into_II a_AT1 deep_JJ recession_NN1 ._. 
The_AT credit_NN1 crunch_NN1 intensified_VVN and_CC asset_NN1 prices_NN2 continued_VVD to_TO fall_VVI ._. 
High_JJ uncertainty_NN1 ,_, large_JJ wealth_NN1 losses_NN2 ,_, and_CC lower_JJR earnings_NN2 prospects_NN2 drove_VVD consumer_NN1 confidence_NN1 to_TO record_VVI lows_NN2 and_CC caused_VVD a_AT1 big_JJ jump_NN1 in_II savings_NN2 rates_NN2 ._. 
With_IW consumption_NN1 depressed_VVD ,_, real_JJ GDP_NN1 contracted_VVN by_II more_DAR than_CSN 6_MC percent_NNU in_II the_AT fourth_MD quarter_NN1 of_IO 2008_MC and_CC by_II 5.7_MC percent_NNU in_II the_AT first_MD quarter_NN1 of_IO 2009_MC ,_, and_CC the_AT unemployment_NN1 rate_NN1 rose_VVD to_II 8.5_MC percent_NNU ._. 
In_II Europe_NP1 ,_, financial_JJ systems_NN2 suffered_VVD a_AT1 much_RR larger_JJR and_CC more_RGR sustained_JJ shock_NN1 than_CSN expected_JJ ,_, macroeconomic_JJ policies_NN2 were_VBDR generally_RR slow_JJ to_TO react_VVI ,_, and_CC confidence_NN1 plunged_VVN as_CSA households_NN2 and_CC firms_NN2 drastically_RR scaled_VVN back_RP ._. 
Exposure_NN1 to_II U.S.-based_JJ assets_NN2 caused_VVD major_JJ repercussions_NN2 in_II the_AT banking_NN1 system_NN1 because_II21 of_II22 the_AT close_JJ linkages_NN2 among_II Europe_NP1 's_GE major_JJ financial_JJ institutions_NN2 and_CC their_APPGE high_JJ degree_NN1 of_IO leverage_NN1 ._. 
Most_DAT advanced_JJ countries_NN2 suffered_VVD sharp_JJ contractions_NN2 in_II financial_JJ year_NNT1 2009_MC ._. 
In_II Asia_NP1 ,_, the_AT advanced_JJ economies_NN2 took_VVD the_AT hardest_RRT hit_VVN because_II21 of_II22 their_APPGE greater_JJR exposure_NN1 to_II the_AT decline_NN1 in_II external_JJ demand_NN1 ,_, especially_RR for_IF consumer_NN1 goods_NN2 ._. 
Japan_NP1 's_GE economy_NN1 contracted_VVN at_II a_AT1 14_MC percent_NNU annualized_JJ rate_NN1 in_II the_AT fourth_MD quarter_NN1 of_IO 2008_MC as_II the_AT yen_NN 's_GE strength_NN1 and_CC relatively_RR tighter_JJR credit_NN1 conditions_NN2 added_VVN to_II the_AT problems_NN2 in_II the_AT export_NN1 sector_NN1 ._. 
However_RR ,_, parts_NN2 of_IO the_AT region_NN1 began_VVD to_TO show_VVI modest_JJ signs_NN2 of_IO recovery_NN1 in_II 2009_MC ._. 
Other_JJ advanced_JJ economies_NN2 like_II Canada_NP1 ,_, Australia_NP1 ,_, and_CC New_NP1 Zealand_NP1 dealt_VVD with_IW adverse_JJ terms-of-trade_NN2 shocks_VVZ ,_, the_AT impact_NN1 of_IO sizable_JJ private_JJ wealth_NN1 reduction_NN1 ,_, and_CC for_IF Canada_NP1 ,_, weak_JJ demand_NN1 in_II the_AT United_NP1 States_NP1 ._. 
However_RR ,_, after_CS years_NNT2 of_IO prudent_JJ fiscal_JJ policy_NN1 management_NN1 and_CC more_RGR conservative_JJ financial_JJ system_NN1 regulation_NN1 ,_, these_DD2 countries_NN2 were_VBDR better_RRR placed_VVN than_CSN other_JJ advanced_JJ economies_NN2 to_TO mitigate_VVI further_RRR declines_VVZ in_II demand_NN1 ._. 
Emerging_JJ Markets_NN2 Emerging_VVG Europe_NP1 was_VBDZ hit_VVN very_RG hard_RR by_II the_AT contraction_NN1 in_II gross_JJ global_JJ capital_NN1 flows_NN2 and_CC flight_NN1 from_II risk_NN1 ._. 
Many_DA2 countries_NN2 in_II the_AT region_NN1 relied_VVD heavily_RR on_II capital_NN1 inflows_NN2 from_II Western_JJ banks_NN2 to_TO sustain_VVI local_JJ credit_NN1 booms_NN2 ._. 
There_EX were_VBDR large_JJ intra-European_JJ cross-border_JJ bank_NN1 exposures_NN2 ,_, and_CC many_DA2 banks_NN2 in_II emerging_VVG European_JJ countries_NN2 were_VBDR owned_VVN by_II distressed_JJ foreign_JJ financial_JJ institutions_NN2 ._. 
The_AT situation_NN1 deteriorated_VVD sharply_RR in_II the_AT fall_NN1 of_IO 2008_MC ,_, with_IW sovereign_NN1 spreads_VVZ jumping_VVG across_II the_AT board_NN1 and_CC exchange_NN1 rates_NN2 depreciating_VVG sharply_RR in_II countries_NN2 with_IW flexible_JJ regimes_NN2 ._. 
The_AT combination_NN1 of_IO a_AT1 drop_NN1 in_II import_NN1 demand_NN1 in_II advanced_JJ country_NN1 markets_NN2 ,_, a_AT1 collapse_NN1 in_II property_NN1 prices_NN2 ,_, limited_JJ access_NN1 to_TO credit_VVI ,_, and_CC currency_NN1 depreciations_NN2 in_II the_AT context_NN1 of_IO sizable_JJ balance_NN1 sheet_NN1 mismatches_NN2 led_VVN to_II a_AT1 very_RG hard_JJ landing_NN1 ,_, and_CC even_RR full-blown_JJ crises_NN2 in_II some_DD countries_NN2 ._. 
With_IW exports_NN2 and_CC output_NN1 plummeting_VVG and_CC government_NN1 revenues_NN2 worsening_JJ ,_, a_AT1 number_NN1 of_IO countries_NN2 received_VVD support_NN1 from_II the_AT IMF_NP1 and_CC other_JJ international_JJ financial_JJ institutions_NN2 to_TO sustain_VVI their_APPGE balance_NN1 of_IO payments_NN2 ._. 
Countries_NN2 in_II the_AT Commonwealth_NN1 of_IO Independent_JJ States_NN2 (_( CIS_NN2 )_) experienced_VVD the_AT largest_JJT reversal_NN1 last_MD year_NNT1 ._. 
CIS_NN2 economies_NN2 were_VBDR hit_VVN by_II three_MC major_JJ shocks_NN2 :_: external_JJ funding_NN1 was_VBDZ shut_VVN off_RP or_CC greatly_RR curtailed_VVN ;_; demand_VV0 in_II CIS_NN2 export_VV0 markets_NN2 dropped_VVN ;_; and_CC commodity_NN1 prices_NN2 ,_, especially_RR those_DD2 for_IF energy_NN1 ,_, collapsed_VVD ._. 
Financial_JJ systems_NN2 in_II several_DA2 CIS_NN2 countries_NN2 were_VBDR very_RG open_JJ and_CC more_RGR susceptible_JJ to_II financial_JJ turbulence_NN1 from_II abroad_RL ._. 
After_CS years_NNT2 of_IO strong_JJ growth_NN1 ,_, output_NN1 is_VBZ expected_VVN to_TO contract_VVI by_II more_DAR than_CSN 5_MC percent_NNU in_II 2009_MC ._. 
Inflation_NN1 did_VDD not_XX ease_VVI as_RG much_DA1 as_CSA in_II other_JJ emerging_JJ markets_NN2 because_II21 of_II22 depreciation_NN1 pass-through_JJ effects_NN2 ._. 
The_AT impact_NN1 of_IO weaker_JJR currencies_NN2 imposed_VVD a_AT1 major_JJ burden_NN1 on_II nonfinancial_JJ firms_NN2 in_II CIS_NN2 countries_NN2 that_CST borrowed_VVD in_II foreign_JJ currency_NN1 ,_, requiring_VVG massive_JJ cutbacks_NN2 in_II investment_NN1 and_CC employment_NN1 ._. 
Latin_JJ America_NP1 suffered_VVD from_II the_AT same_DA trio_NN1 of_IO shocks_NN2 as_CSA the_AT CIS_NN2 countries_NN2 ,_, but_CCB the_AT overall_JJ impact_NN1 was_VBDZ less_RGR severe_JJ than_CSN in_II Europe_NP1 because_CS public_JJ and_CC private_JJ balance_NN1 sheets_NN2 were_VBDR relatively_RR strong_JJ ,_, financial_JJ systems_NN2 were_VBDR less_RGR exposed_JJ on_II the_AT liabilities_NN2 side_NN1 to_II advanced_JJ economies_NN2 '_GE banking_NN1 systems_NN2 ,_, and_CC several_DA2 large_JJ economies_NN2 were_VBDR able_JK to_TO use_VVI the_AT exchange_NN1 rate_NN1 as_II a_AT1 shock_NN1 absorber_NN1 ._. 
The_AT financial_JJ crisis_NN1 nonetheless_RR led_VVN to_II a_AT1 sell-off_NN1 in_II equity_NN1 markets_NN2 in_II late_JJ 2008_MC ,_, a_AT1 spike_NN1 in_II funding_NN1 costs_NN2 ,_, and_CC a_AT1 jump_NN1 in_II spreads_NN2 on_II corporate_JJ and_CC sovereign_JJ debt_NN1 ._. 
Capital_NN1 flows_NN2 dwindled_VVD and_CC domestic_JJ currencies_NN2 depreciated_VVD sharply_RR in_II countries_NN2 with_IW flexible_JJ regimes_NN2 ._. 
This_DD1 was_VBDZ followed_VVN rapidly_RR by_II a_AT1 slowdown_NN1 in_II credit_NN1 growth_NN1 and_CC collapse_NN1 in_II industrial_JJ production_NN1 and_CC exports_NN2 ._. 
Central_JJ American_JJ and_CC Caribbean_JJ countries_NN2 were_VBDR hit_VVN also_RR by_II a_AT1 sharp_JJ decline_NN1 in_II tourism_NN1 receipts_NN2 and_CC remittances_NN2 to_II the_AT region_NN1 ,_, and_CC several_DA2 countries_NN2 in_II Central_JJ America_NP1 and_CC the_AT Caribbean_JJ sought_JJ support_NN1 from_II the_AT IMF_NP1 and_CC other_JJ international_JJ financial_JJ institutions_NN2 ._. 
The_AT large_JJ drop_NN1 in_II the_AT price_NN1 of_IO oil_NN1 in_II financial_JJ year_NNT1 2009_MC had_VHD a_AT1 substantial_JJ impact_NN1 on_II the_AT economies_NN2 of_IO the_AT Middle_JJ East_ND1 and_CC South_ND1 America_NP1 ._. 
Other_JJ countries_NN2 were_VBDR affected_VVN by_RP declines_VVZ in_II exports_NN2 ,_, tourism_NN1 ,_, remittances_NN2 ,_, and_CC foreign_JJ direct_JJ investment_NN1 ._. 
As_CSA external_JJ conditions_NN2 deteriorated_VVD and_CC capital_NN1 flows_NN2 reversed_VVD ,_, several_DA2 equity_NN1 and_CC property_NN1 markets_NN2 declined_VVD ._. 
High_JJ government_NN1 expenditure_NN1 programs_NN2 were_VBDR launched_VVN swiftly_RR to_TO pick_VVI up_RP the_AT slack_NN1 ,_, drawing_VVG on_II the_AT large_JJ buffers_NN2 accumulated_VVN during_II the_AT boom_NN1 years_NNT2 ._. 
Low_JJ -Income_JJ Countries_NN2 Although_CS financial_JJ linkages_NN2 between_II low-income_JJ countries_NN2 (_( particularly_RR those_DD2 in_II sub-Saharan_JJ Africa_NP1 )_) and_CC advanced_JJ economies_NN2 were_VBDR relatively_RR limited_VVN ,_, few_DA2 countries_NN2 were_VBDR able_JK to_TO escape_VVI the_AT economic_JJ storm_NN1 ._. 
Demand_VV0 for_IF exports_NN2 weakened_VVN and_CC was_VBDZ compounded_VVN by_II a_AT1 decline_NN1 in_II the_AT prices_NN2 of_IO most_DAT goods_NN2 from_II low-income_JJ countries_NN2 ._. 
On_II the_AT one_MC1 hand_NN1 ,_, the_AT declines_VVZ in_II world_NN1 commodity_NN1 prices_NN2 did_VDD help_VVI to_TO reduce_VVI inflation_NN1 and_CC had_VHD offsetting_JJ terms-of-trade_NN2 effects_NN2 ._. 
While_CS the_AT prices_NN2 of_IO commodity_NN1 exports_NN2 declined_VVD ,_, the_AT prices_NN2 of_IO commodity_NN1 imports_NN2 such_II21 as_II22 food_NN1 and_CC fuel_NN1 also_RR declined_VVN ,_, often_RR raising_VVG the_AT real_JJ incomes_NN2 of_IO the_AT poorest_JJT parts_NN2 of_IO the_AT population_NN1 ._. 
However_RR ,_, a_AT1 drop_NN1 in_II workers_NN2 '_GE remittances_NN2 ,_, tighter_JJR global_JJ credit_NN1 conditions_NN2 ,_, and_CC lower_JJR foreign_JJ direct_JJ investment_NN1 caused_VVD external_JJ balances_NN2 to_TO deteriorate_VVI ._. 
The_AT overall_JJ fiscal_JJ position_NN1 in_II LICs_NP1 weakened_VVD ,_, mainly_RR as_II a_AT1 result_NN1 of_IO a_AT1 large_JJ swing_NN1 in_II fiscal_JJ balances_NN2 of_IO some_DD oil-exporting_JJ countries_NN2 ._. 
For_IF other_JJ countries_NN2 ,_, weaker_JJR fiscal_JJ positions_NN2 were_VBDR generally_RR justified_VVN and_CC were_VBDR supported_VVN under_II IMF_NP1 arrangements_NN2 ._. 
Policymakers_NN2 took_VVD measures_NN2 to_TO maintain_VVI macroeconomic_JJ stability_NN1 and_CC preserve_VVI the_AT hard-won_JJ gains_NN2 against_II poverty_NN1 achieved_VVN in_II recent_JJ years_NNT2 ._. 
However_RR ,_, as_CSA the_AT availability_NN1 of_IO financing_VVG to_TO cover_VVI external_JJ deficits_NN2 became_VVD more_RGR limited_JJ ,_, those_DD2 with_IW tight_JJ domestic_JJ and_CC external_JJ financing_NN1 constraints_NN2 sought_VVD additional_JJ donor_NN1 support_NN1 ._. 
