Emerging and Developing Economies: Ten Years After the Global Recession

Although emerging market and developing economies (EMDEs) weathered the global
recession a decade ago relatively well, they now appear less well placed to cope with
the substantial downside risks facing the global economy. In many EMDEs, the room for
monetary and fiscal policies to respond to shocks has eroded; underlying growth
potential has slowed; and the momentum for improving policy frameworks, institutions,
and business climates seems to have slackened. The experience of the 2009 global
recession highlights once again the critical role of policy room in shielding economic
activity during adverse shocks. The subsequent decade of anemic growth underlines the
need for sound policy frameworks, institutions, and business environments to promote
sustained growth. With the global growth outlook weakening and vulnerabilities rising,
the policy priority for EMDEs is now to improve resilience to shocks and to lift long-term
growth prospects.