Great Recession/Addendum

International recession and recovery by region

The World

GDP growth (%))
2007	2008	2009	2010e
	1.7	-2.2

The financial crisis had an adverse effect upon most of the world's economies, and among those most affected were the high income countries (The United States, Canada, Europe and Japan) with a collective GDP reduction in 2009 of 3.3 per cent. Output reductions between the peak in 2008 and the trough in 2009 were approximately 4 per cent of GDP in the United States, 6 percent in the United Kingdom, 6½ per cent in Italy, 7 per cent in Germany and 8½ per cent in Japan. Next in severity were the downturns of the developing economies (excluding China and India) with a collective GDP reduction of 2.2 per cent, mainly as a result of the loss of capital inflows and of a collapse of world trade, and by the spring of 2009 most of the world's economies were facing severe damage.

Crude oil price ($/barrel[12])
2007		2008		2009		2010
Jan	Jun	Jan	Jun	Jan	Jun	Jan	Jun
56	65	98	139	46	68	83	72

There were large variations in impact, however. The average rate of GDP growth fell from 8 per cent to 2 percent, compared with the fall from 3½ per cent to -3½ percent It had little effect on the South Asian economies, the East Asian economies were less adversely affected by the crisis than other regions, and the impacts on the economies of China and India took the form only of significant growth rate reductions. The severest effects were upon the economies of the Baltic States, Iceland and Ireland.

The advanced G20 countries entered the recession in 2007 with a public debt averaging 78 per cent of GDP (United Kingdom 44 per cent, United States 62, Germany 63, France 64, Italy 104, Japan 188), which is projected to rise to 118 per cent by 2014 (Germany 89 per cent , France 96, United Kingdom 98, United States 108, Italy 129, Japan 246 )

America

The United States

				2007				2008				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous quarter at an annual rate)	2.0	0.4	-2.5	1.2	3.2	3.6	2.1	-0.7	1.5	-2.7	-5.4	-6.4	-0.7	2.2	5.6	3.7	2.4
Unemployment (% of labour force)	4.6	5.8	9.3	4.5	4.4	4.6	4.7	5.0	5.4	6.1	6.9	8.2	9.3	9.7	10.0
Consumer prices (% increase on the same period of the previous year)		3.8	-0.4	2.8	2.7	2.0	4.3	4.0	4.2	5.4	1.1	0.2	-1.3	-1.5	1.8

The growth rate of American economy slowed sharply from around 3 per cent in 2006 to 2 per cent in 2007 and the economy continued to operate at below its trend rate of growth until the fourth quarter of 2009. Following the bursting of the house price bubble and the development of the subprime mortgage crisis in 2007, two and a half million families faced foreclosure in 2008, and the reductions in personal wealth resulting from the fall in house prices were causing further reductions in demand. The financial crash of 2008, and the resulting credit crunch, caused further declines in business activity, which added more pressure on the financial system and three and a half million Americans lost their jobs in the course of 2008. Credit remained tight in 2009 with lenders imposing strict standards for all types of loans and unemployment continued to rise throughout the year.

The Federal Reserve Bank introduced a range of emergency measures, including discount rate reductions and credit easing that resulted in an increase in the monetary base of approximately 140 per cent over its pre-crisis level by the end of 2009 , and the government introduced a fiscal stimulus package that is estimated to total 4.8 per cent of GDP . The Federal budget deficit rose sharply under the operation of the economy's automatic stabilisers, and by 2010 the public debt had risen from its 2007 level of 62 percent of GDP to over 90 per cent which is projected to rise to 108 percent by 2014. The country's total debt in 2008 was 290 per cent of GDP (made up of government debt 60 per cent, household debt 78 per cent and business debt 152 per cent) .

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Canada

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	2.7	0.5	-2.6	-1.8	-0.9	0.2	1.2
Unemployment (% of labour force)	6.0	6.1	8.3	7.8	8.4	8.5	8.9
Consumer prices (% increase on the same period of the previous year)		2.4	0.3	1.4	0.1	-0.8	1.0

The Canadian mortgage market did not experience the surge in defaults that triggered the subprime mortgage crisis in the United States, and the subsequent financial crash of 2008 had little effect upon the Canadian financial system. Events in the United States nevertheless affected the rest of the Canadian economy. The economic growth rate faltered in the Autumn of 2007 as exports fell in response to falling demand from the United States, and the downturn developed into a sharp contraction, led by falling investment and household spending, in the last quarter of 2008. The government introduced fiscal stimulus measures amounting to 4 per cent of GDP spread over the three years 2008-10, and a modest recovery started in the second half of 2009.

Central and Southern America

	GDP growth (%)
	2007	2008	2009	2010e
Mexico	3.3	1.4	-7.1	3.5
Brazil	5.7	5.1	0.1	3.6
Argentina	8.7	6.8	-2.2	2.3

The Mexican economy suffered from a sharp fall in Mexican workers'remittances from abroad and from the fall in the price of oil. In Brazil, GDP fell by 0.2 percent year-on-year in the first two quarters of the crisis period, but rebounded in the second and third quarter of 2009. In Argentina, GDP increased by 0.5 and 0.2 percent on an annualized basis in the second and third quarters of 2009.

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Europe

The United Kingdom

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	3.0	0.7	-4.8	-2.6	-0.6	-0.3	0.4	0.3	1.1
Unemployment (% of labour force)	5.3	5.2	7.6	7.7	7.7	7.8	7.7	7.3
Consumer prices (% increase on the same period of the previous year)		3.6	2.2	3.1	2.2	1.5	1.9
Savings ratio	2.4	1.4	6.3	4.5	7.8	8.4	7.0

The rapid growth of the British economy in the early years of the 21st century had been partly due to the success of its comparatively large financial sector and to the development of a comparatively vigorous housing boom, and those factors had a strong influence upon the impact of the recession that followed the collapse of the Lehman Brothers bank in the United States. Even before that collapse, some of its banks had been forced to make large writedowns because of their involvement in the subprime mortgages crisis and there had been a run on one of them , but the banking panic that followed the fall of Lehman Brothers, threatened the continued existence of the financial system. In October 2008 the British Government announced a £500 billion rescue scheme , including powers to take equity stakes in ailing banks and an undertaking to guarantee interbank loans. An impending collapse of the UK's financial system was averted, but the surviving banks adopted a policy of deleveraging that resulted in a severe credit crunch followed by a general economic downturn. In the second half of 2008 gdp fell by 2.2 per cent with falls in financial sector output and in housing and commercial investment. The effective exchange rate fell by about 20 per cent during 2008, but its effect upon the balance of payments was more than offset by a fall in exports.

The Bank of England introduced a range of emergency measures including discount rate reductions and quantitative easing that resulted in an increase in the monetary base of approximately 230 per cent over its pre-crisis level by the end of 2009 A fiscal stimulus amounting to 1.5 per cent of GDP was introduced by the November Pre-Budget Report, including a temporary 2.5 percentage point reduction in value-added tax and a bringing forward of £3 billion of capital investment.

In 2008, the country's total debt was 469 per cent of GDP (made up of government debt 52 per cent, household debt 114 per cent and business debt 303 per cent). The possibility of household deleveraging was considered in 2010 to present a danger of hampering recovery from the recession.

The United Kingdom entered the recession in 2007 with a public debt of 44 per cent of its GDP, which had risen to 62 per cent by 2010, about 30 per cent of which was held by overseas investors. In February 2010 its Parliament passed the Fiscal Responsibility Act which imposed a duty on the Treasury to ensure that by the financial year ending 2014 public sector net borrowing as a percentage of GDP is at least halved from its level for the financial year ending 2010, and the budget of June 2010 introduced proposals that were expected to achieve that halving a year sooner. The tax increases involved include a delayed increase in value-added tax; the expenditure reductions are to be decided by a public expenditure review.

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The Eurozone

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)		0.6	-3.9	-2.5	-0.1	0.4	0.1
Unemployment (% of labour force)	7.5	7.5	9.4	8.8	9.3	9.6	9.9
Consumer prices (% increase on the same period of the previous year)		3.3	0.3	1.2	0	-0.2	0.5

The recession had widely differing impacts upon the economies of members of the European Union's monetary union but all were subject to the monetary policy of the European Central Bank. The bank responded to the recession by reducing its discount rate in stages to a minimum of 1 per cent, and adopting a limited amount of quantitative easing, a policy that resulted in an increase in the monetary base of approximately 50 per cent over its pre-crisis level by the end of 2009. The European Union's output loss between the second quarter of 2008 and the end of 2009 is estimated to have reached 5% of GDP by the end of 2009. Among the larger Eurozone countries, the 2009 contraction ranged from about 2% in France to 4½-5% in Germany, and Italy. However, business confidence began to improve during the second quarter of 2009 and a hesitant recovery in output began in the third quarter.

The Euro crisis

With the return of economic growth, attention turned to fiscal policy. The EUs growth and stability pact required member governments to limit their budget deficits to 3 per cent of GDP and their public debt to 60 per cent of GDP, but there had been numerous breaches.

PIIGS debt, 2009 (% of GDP)
	Portugal	Italy	Ireland	Greece	Spain
Public Debt,	76.8	115.8	64.0	115.1	53.2
Budget Deficit	9.4	5.3	14.3	13.6	11.2

Few member governments were in compliance with those limits by the end of 2009 . Twelve Member States had public debt ratios higher than 60% of GDP in 2009, including France (77.6%) and Germany.(60.9%). Particular concern developed in early 2010 concerning the fiscal sustainability of the economies of the "PIIGS" countries (Portugal, Ireland, Italy, Greece and Spain) following rating downgrades by the credit rating agencies.

In May 2010, a €500 billion European financial stabilisation mechanism was established, enabling member states in difficulties to get loans from the European Central Bank (subject to the adoption of measures to restore fiscal sustainability) and the Bank launched a securities market programme, designed to calm the bond market.

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Germany

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	2.5	1.3	-5.0	-3.5	0.4	0.7	0.0	0.2
Unemployment (% of labour force)	8.4	7.5	7.5	7.3	7.6	7.6	7.5	7.3
Consumer prices (% increase on the same period of the previous year)		2.6	0.4	1.0	0.0	0.1	0.4

The international banking panic had an immediate impact on Germany's fragmented banking system and in October 2008 the government set up a fund to guarantee the banks' debts and provide for recapitalisation and asset purchases. Although there had been falls in national output earlier in the year, the government did not at first consider further action to be necessary, but by the end of the year a fall in exports signalled the onset of major downturn.

The government introduced a fiscal stimulus package that is estimated to total 3.4 per cent of GDP that included reductions in income, and payroll taxes(starting in July) as well as industrial subsidies and infrastructure investments. Those discretionary actions together with the action of the automatic stabilisers were expected to increase the budget deficit to 7% of GDP and raise the national debt from its 2007 level of 65 per cent of GDP to over 80 per cent by 2010. The recovery in the second half of 2009 has been attributed by the OECD to the fiscal stimulus, expansionary monetary conditions, an upswing in world trade and restocking activities of companies but in view of the substantial output gap that remained at the end of 2009 they estimate that the pre-crisis level of production will not be reached until 2013.

Germany entered the recession in 2007 with a national debt of 63 per cent of its GDP which is projected to rise to 101 percent by 2014. In 2008, the country's total debt was 274 per cent of GDP (made up of government debt 69 per cent, household debt 66 per cent and business debt 138 per cent)

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France

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	2.2	0.8	-2.3	-1.4	0.3	0.2	0.6	0.1
Unemployment (% of labour force)	8.3	7.9	9.4	8.9	9.3	9.6	10.0	10.1
Consumer prices (% increase on the same period of the previous year)		2.8	0.1	0.9	-0.3	-0.2	0.4

The French economy suffered less from the recession than those of most of the other G7 countries. French banks were affected less than their counterparts in many other countries, primarily because they had diversified their activities and adopted more ,defensive prudential lending standards, and household indebtedness remained lower than in other countries. The measures taken by the government in October 2008 to boost the liquidity and solvency of the big banks were successsful in maintainng the functioning of the credit market .

The government introduced a fiscal stimulus package that is estimated to total 1.3 per cent of GDP including infrastructure spending, measures to relieve cash-flow difficulties for small and medium-sized enterprises, tax holidays for low-income households, increased unemployment compensation, and loans to the car and aircraft industries.

France entered the recession in 2007 with a national debt of 64 per cent of its GDP which is projected to rise to 96 percent by 2014. In 2008, the country's total debt was 308 per cent of GDP (made up of government debt 73 per cent, household debt 110 per cent and business debt 125 per cent)

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Italy

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	1.6	-1.0	-5.0	-2.4	-0.5	0.3	-0.3	0.5
Unemployment (% of labour force)	6.2	6.8	7.8	7.4	7.5	7.8	8.3	8.8
Consumer prices (% increase on the same period of the previous year)		3.3	0.8	1.6	0.9	0.1	0.7

Italian banks were less exposed to high-risk products than those of other large countries because of their conservative behaviour and their regulators' and supervisory caution, and there were no bank closures or rescues. . The economy nevertheless suffered a relatively severe recession.

Italy entered the recession in 2007 with a national debt of 104 per cent of its GDP which is projected to rise to 129 percent by 2014. In 2008, the country's total debt was 298 per cent of GDP (made up of government debt 117 per cent, household debt 81 per cent and business debt 303 per cent)

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Iceland

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	5.6	1.7	-7.0	-4.2	1.2	-7.2
Unemployment (% of labour force)	2.3	3.0	7.2	7.2	6.9	7.2	7.8

Before the Lehman Brothers collapse in September 2008, Iceland had a thriving economy, its government had a budgetary surplus, its banks had no toxic assets and its consumers had not indulged in any speculative bubbles. (Although Willem Buiter and Anne SIbert , believed that its banking model was not viable). A few months later its banking system had collapsed, its government was deeply in debt, its currency had suffered a 65 per cent depreciation, real earnings had fallen by 18 per cent, and its economy was facing a deep and prolonged recession. Those were the consequences of the impact of the international credit crunch on a banking system that had overseas debts amounting to almost ten times the country's GDP. Unable to roll over their debts, three of its largest banks had to be rescued by the government, and the consequent rise in national debt caused a flight from the national currency that made matters worse. In October 2009 an OECD economist reported that Iceland's economy was in the midst of a deep recession; the exchange rate had plunged; capital flows had been frozen; inflation was up; public debt had risen; social needs had increased; and that the unemployment insurance fund was been nearly depleted. In November 2009 the Moodys credit rating agency downgraded Iceland's government bonds to its lowest investment grade. The government had introduced fiscal stimulus measures amounting to 9.4 per cent of GDP spread over the two years 2009-10, a loan was obtained from the International Monetary Fund and recovery was expected during 2011 .

In a June 2010 press release, the IMF effectively approved the Government's fiscal policy with the statement that "the planned 3 percent of GDP fiscal adjustment can deliver a primary surplus and a reduction in Iceland’s public debt, provided budget implementation stays on track in 2010".

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Ireland

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	6.0	-3.0	-7.5	-2.1	-0.8	0.3	-2.6	-2.3
Unemployment (% of labour force)	4.6	6.0	11.8	10.3	11.9	12.2	13.0	13.2

A downturn in the output of the formerly booming Irish construction industry that started in 2007, intensified and developed into a full-blown economic recession in the course of 2008 and construction and property companies began to default on loans from the banks. News of their defaults made foreign banks and investors, that had been the banks' principal source of short-term finance, reluctant to risk further commitments, and a banking crisis developed. Consumer confidence fell and there was a very sharp increase in unemployment. In an attempt to restore confidence, the Irish government undertook to guarantee loans to the banks. GDP growth rates averaging about 6 percent over the period 1995-2007 were followed by year-on-year falls of 8 percent in the 4th quarter of 2008 and 9 per cent in the first quarter of 2009, and the inflation rate fell to -3 per cent in September 2009. The government introduced fiscal stimulus measures amounting to 4.4 per cent of GDP spread over the three years 2008-10 which, combined with the effects of its automatic stabilisers is expected to raise the national debt to over 80 per cent of GDP from its 2007 level of 28 per cent. Foreign investors became wary of the possibility a sovereign default, and the government's ability to finance the deficit was threatened by a general loss of confidence. In March 2009 the Standard and Poor credit rating agency downgraded its rating for Ireland from AAA to AA+, and April, the government decided that the only way to restore confidence was to take steps to reduce its deficit - and took the extraordinary step of increasing taxation in the midst of a recession . Additional steps taken included direct purchase of stock in some banks and the establishment of the "National Asset Management Agency" - essentially a government-owned bank that will buy toxic debt from six financial institutions - both steps aimed at improving their balance sheets and freeing up capital..

The report of an IMF consultation published in July 2010 concluded that the governments "aggressive measures" had helped gain policy credibility and stabilize the economy but that further long-haul efforts with active risk management would be need to preserve policy credibility

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Russia

GDP growth (%)
2007	2008	2009	2010e
8.1	5.6	-7.9	4.3

A fall in theoil price combined with the collapse in world trade and a withrawal of international credit had a devastating effect upon the Russian economy in the first half of 2009, and its GDP fell by about 10 percent . That prompted the central bank to inject large amounts of liquidity into the banking sector and to permit a gradual depreciation of the rouble by about 25 per cent against the dollar-euro basket. The Government launched a major fiscal stimulus in April 2009, consisting mainly of social transfer payments[13]. The budget balance changed from a surplus of 4¼ per cent of GDP in 2008 to a deficit of 6¼ per cent in 2009 which the Government monetised from reserves, leaving its public debt at the internationally low level of 11 per cent of GDP

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The Baltic States

	GDP growth (%)
	2007	2008	2009	2010e
Estonia	7.2	-3.6	-14.7	-1.5
Lithuania	9.8	2.8	-14.8	3.3
Latvia	10.0	-4.6	-18.0	_4.0

The the fastest-growing economies in the European Union in 2006 became its three fastest-contracting economies in 2009. Years of boom were followed by falls in GDP averaging about 1½ per cent in 2008 and about 16 per cent in 2009. An International Monetary Fund report on Estonia noted that investment already started to slow in mid-2007, along with a bursting of the property bubble, when the two main banks tightened lending conditions. The collapse of global external financing and foreign trade in the Lehman Brothers bankruptcy aftermath exacerbated the downturn. Deflation and wage declines were projected to persist through 2010 , but growth rates are expected to average between 2 and 5 per cent over the period 2010-14.

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Greece

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	4.5	2.0	-1.1	-1.0	-0.3	-0.5	-0.8	-0.8
Unemployment (% of labour force)	8.3	7.7		8.8	9.2	9.7	10.2	10.2

When Greece joined the Eurozone in 2001, it was less prosperous than the other members, but its GDP grew more rapidly over the next seven years and fell less rapidly in the course of 2009. By the end of 2009, its unemployment rate had nevertheless risen in line with the European average and it was still suffering higher levels of poverty , and its national debt had risen by about 25 per cent above its pre-crisis level of 100 per cent of GDP. Concern about the sustainability of the goverment's fiscal policy had led the credit rating agencies to downgrade the government's debt in January 2010, , and several times after that; and by early 2010 the cost of insuring against default by the Greek government rose after Moody’s Investors Service said the country’s economy was facing a “slow death” from deteriorating finances. The investor panic continued until, in April 2010, it was announced that members of the Eurozone were prepared to offer the government a conditional of €30 billion at lower interest rates than the current market rate (then over 7 per cent) . In return, the Government was required to carry out a programme of fiscal contraction that was expected to drive its economy into a deep recession. The statement did not have the expected stabilising effect, but was followed by increases in risk premiums and further credit rating downgrades with Standard and Poor estimating that investors would recover only 30 to 50 per cent of their investments if the Greek government defaults. A further agreement on May 2 to lend the Greek government €110 billion also failed to reassure investors. Public spending cut-backs have sparked widespread demonstrations. An August 2010 review applauded the government's measures, but investors continued to be unwilling to buy its bonds.

Spain

GDP growth (%)[14]
2007	2008	2009	2010e
3.6	0.9	-3.6	-0.4

The recession in Spain was shallower but more protracted than the European average, and the recovery, which started in the first quarter of 2010, has been described as "weak and fragile". Spain's unemployment rate was among the highest in Europe, reaching 19 per cent in March 2010. A major contributory factor was the bursting of a vigorous housing bubble, as a result of which the construction sector crashed, and the banking sector suffered a downturn despite the fact that it had avoided the acquisition of toxic debt. Another major factor was deleveraging of a deeply indebted household sector. The Government responded with a major fiscal stimulus that, together with the effects of the country's automatic stabilisers resulted in the largest budget deficit in the European Union - although its public debt as a percentage of GDP was among the smallest. In 2010, the bond market developed a debt aversion against Spain following the Greek crisis, the Standard and Poor credit rating agency downgraded its credit rating from AA+ to AA on 28 April 2010, and the sovereign spread over Germany's 10-year bonds rose to 164 basis points in early May 2010.

Portugal

GDP growth (%)[15]
2007	2008	2009e	2010e
1.9	0.0	-2.7	0.5

The Portugese economy has long depended upon agricultural exports, tourism, and income from its nationals working abroad - all three of which were hit by the recession. It went into downturn earlier than the European average and emerged no sooner. The Government responded with a fiscal stimulus equivalent to about 1¼ per cent of GDP. According to its statistics institute, the Portugese economy grew by 0.3 per cent in the second quarter of 2009 after contracting in the previous three quarters, leaving at 3.7 per cent lower than a year previously. The ensuing growth rate has been low and the unemployment rate has remained above 10 per cent. Portugal's public debt reached 77 per cent of GDP in 2009 and was expected to expand further in 2010. . Deficit-reducing measures were put in hand and were met with strong trade union resistance. Unease following downgrades of Greek government bonds caused increasing debt aversion towards Portugal, and Standard and Poor downgraded its credit rating from A+ to A- (4 grades below the top) on 27th April 2010.

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Asia

Japan

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	2.4	-0.6	-5.3	-3.6	1.5	-0.1	0.9
Unemployment (% of labour force)	3.9	4.0	5.1	4.3	5.1	5.4	5.2
Consumer prices (% increase on the same period of the previous year)		1.4	-1.4	-0.1	-1.1	-2.2	-1.9

Japan has suffered a much deeper recession than the other large industrialised economies mainly because of its greater reliance upon exports of cars and high-technology products. Output was also restricted by a credit crunch and by the need to reduce high inventory levels the government introduced fiscal stimulus measures amounting to 2 per cent of GDP . Combined with the effect of the country's automatic stabilisers, its national debt (the majority of which was held by domestic investors) is expected to rise to over 200 per cent of GDP from its already massive pre-crisis level of 167 per cent.

Japan entered the recession in 2007 with a national debt of 188 per cent of its GDP which is projected to rise to 246 percent by 2014. About 95 per cent of the national debt is held by domestic investors. In 2008, the country's total debt was 459 per cent of GDP (made up of government debt 188 per cent, household debt 96 per cent and business debt 175 per cent)

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China

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)		9.6	8.7

In November 2008, the Chinese Government announced a fiscal stimulus amounting to 4.4 per cent of its GDP, in addition to which there was a massive increase in bank lending. The effect was partially to offset the effect of the collapse in world trade upon its export sales. Strong export growth resumed in the course of 2009 - rising to above pre-crisis levels in 2010. There were increasing signs in early 2010 of a developing boom in property prices.

India

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	9.0	6.3	5.8e

A reversal of India's capital inflows started in January 2008 through a massive disinvestment by foreign institutional investors, with a net disinvestment of $13.3 billion from January 2008 to February 2009 following a net investment of $17.7 billion during 2007. That was followed by a massive slowdown in external commercial borrowing by India’s companies, trade credit and banking inflows from April 2008 . There was a progressive reduction in manufacturing output in the course of 2009 following a fall in overseas demand for India's exports

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Australia

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	4.2	2.3	0.8	0.8	0.7	0.3	0.9
Unemployment (% of labour force)	4.4	4.2	5.6	5.3	5.7	5.8	5.6

The government introduced fiscal stimulus measures amounting to 4.6 per cent of GDP spread over the three years 2008-10. In the course of 2009 there was a revival in exports to emerging markets, growth in consumer demand and a recovery in housing and mortgage markets, and in October the central bank raised its discount rate to 3.25%

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Developing countries excluding China and India

				2009				2010
	2007	2008	2009	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
GDP (% change on previous period)	6.2	4.3	-2.2

Most developing countries experienced a slowdown in economic growth in 2008 and 2009. The worst affected were in Latin America and the Caribbean, and in Europe and Central Asia; and none of the other developing countries suffered an actual fall in output. There was weak recovery of output in the course of 2009, but there were still output gaps of around 3 per cent of GDP at the end of 2009, suggesting that high levels of unemployment might continue. perhaps for years . Experience varied among the developing countries, however. Economists at the International Monetary Fund found that the worst affected of the developing countries had been those with highly leveraged domestic financial systems and rapid credit growth. Countries exporting more advanced manufacturing goods had suffered more than those exporting food, and countries with pegged exchange rates had fared less well than those with flexible exchange rates.

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