Euro zone debt crisis: Scenario analysis and implications for developing Asia-Pacific

Sudip Ranjan Basu, Clovis Freire, Pisit Puapan (), Vatcharin Sirimaneetham and Yusuke Tateno ()
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Pisit Puapan: Ministry of Finance, Thailand

No WP/12/03, MPDD Working Paper Series from United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

Abstract: The ongoing euro zone debt crisis creates an undesirable scenario for the global economy as well as for the Asia-Pacific region given that the region has close economic linkages. The paper aims to provide quantitative estimates of the potential impact of the euro zone debt crisis on merchandise exports as well as on economic growth and poverty reduction efforts in the region. The results indicate that a one-percentage-point fall of output growth of the euro zone would result in a total export loss of $166 billion. In addition, the protectionist threats could further increase the loss in exports by $27 billion. On social development, the disorderly euro zone debt crisis scenario would prevent 8.19 million people to get out of poverty and another 1.15 million would be pushed back into poverty as per the $1.25-a-day poverty line. The paper illustrates that macroeconomic policy space appears adequate in most economies that tend to be more heavily affected by the euro zone debt crisis. But strong inflationary pressures and less favourable public debt conditions could prevent some economies from implementing swift and forceful macroeconomic policy responses.

Keywords: Euro zone; Debt crisis; Growth; Inflation; Exports; Protectionism; Poverty reduction; Policy space (search for similar items in EconPapers)
JEL-codes: E31 F14 H63 I32 N14 O47 Q18 (search for similar items in EconPapers)
Date: 2012-08
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Journal Article: Euro zone debt crisis: scenario analysis and implications for developing Asia-Pacific (2013)
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