This note summarizes recent projectionson the longer-term effects of the East Asia's financialcrisis, and the significant effect already felt indeveloping countries. Five main points are examined, asfollows: 1) though trade will drive the recovery, adjustmentwill be deep and protracted, in the region, mostly inIndonesia, Korea, Malaysia, the Philippines and Thailand; 2)developing countries will be mostly affected, sincereductions in growth are estimated to double due to hightrade multipliers, terms of trade movements, as well astight monetary and fiscal policies in those countriesrelying on private capital flows; 3) because of lower oilprices, oil importing countries stand to lose the most, withLatin America, the Middle East, and North and Sub-SaharanAfrica the hardest hit; 4) the crisis will bear asignificant effect on the world economy, though not nearlyas damaging as the 1973 and 1978 oil shocks; and 5)increased risks, such as a spillover or cutoff in credit,for developing countries are estimated, though predicted tobe manageable.
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