This external dependence increases their vulnerability to external economic threats and shocks.

Debt sustainability is also affected by vulnerability to external shocks.

Globalization has increased the vulnerability of the developing and transition economies to adverse external shocks.

Successful coordination in fiscal and monetary affairs would enable the region to manage external shocks successfully.

However, economic growth and expectations are constantly threatened by inappropriate macroeconomic policies, poor economic management and external shocks.

Nevertheless, they still face substantial difficulties in participating in services trade, and their exports are particularly vulnerable to external shocks.

That Committee rightly considered lack of economic diversification as an indicator of the exposure to shocks and recognized that small countries tended to be more vulnerable to external shocks than large ones (E 2005 33, paras.

Many countries therefore view the development of local currency bond markets to be an important policy priority that reduces vulnerability to external shocks.

The Government introduced the Strategic Country Programme 2002 03 aimed at diversifying the economy and preparing it to reduce vulnerability to external shocks.

H. Implications of macroeconomic policy, external shocks and social protection systems for poverty, inequality and social vulnerability in Latin America and the Caribbean

Most such countries were dependent on only a few commodities, which exposed them to external shocks produced by international price fluctuations and a decline in terms of trade.

The reasons for the increase in post HIPC initiative debt burdens in the majority of countries are well known and include both external shocks and poor macroeconomic management.

While economic contractions or expansions may be triggered by external shocks, the magnitude and duration of either is determined by the soundness of economic policy and the efficacy of institutions.

In the current crisis, China, India, and certain other emerging market countries are coping fairly well. These countries all had strong external balance sheets and ample room for fiscal maneuver before the crisis, which allowed them to apply countercyclical policies to combat external shocks.

The most immediate challenge is to safeguard the financial system s stability against external shocks. Policy reform should aim to promote market transparency, improve risk management, and strengthen effective supervision and regulations.

Another, more plausible theory is that over the past fifteen years there have been various external challenges or shocks that have hit the country simultaneously. Rigid as it was, with an extensive welfare system and an over regulated labor market, Germany was unable to react to these shocks and ran into trouble.

Germany s Five Shocks

Formidable challenges lie ahead, however, since the impact of past internal and external disequilibria and the vulnerability of the countries of the region to external shocks are expected to carry over into the future, thus reducing their manoeuvering room for the implementation of countercyclical fiscal and monetary policies.

No one can guarantee that Prime Minister Li Keqiang s attempts to achieve deleveraging and structural reform will succeed. Moreover, external shocks, policy mistakes, and political instability could disrupt even the best laid plans.

ECLAC and UNDP recently joined forces to develop instruments to approximate the impact of macroeconomic and external shocks on labour and household incomes through the use of a computable general equilibrium (CGE) model.

(e) Establishment of a virtual community of knowledge to share experiences and lessons learned in the areas of macroeconomic policy, external shocks and social protection systems in relation to poverty, inequality and social vulnerability

Economic development is a convoluted process, full of challenges and risks, successes and failures, external shocks and internal volatility. And adverse effects such as a rising debt to GDP ratio and excess capacity are inevitable.

Small island developing countries, including Tonga, face many unique challenges because of our small populations, remoteness and dispersed locations, narrow resource endowment and vulnerability to external shocks, including from international market fluctuations and natural disasters.

Two external shocks first from the US, and now from Europe have transformed the Four Uns into an action plan. Overly dependent on external demand from crisis battered developed economies, China has adopted the pro consumption 12th Five Year Plan, which lays out a powerful rebalancing strategy that should drive development for decades.

Following the Asian financial crisis of the late 1990 s, emerging economies began to accumulate massive foreign exchange reserves to protect themselves against the risks of external over indebtedness. In fact, they amassed far more than they needed 6.5 trillion, at last count effectively becoming over insured against external balance of payments shocks.

When one considers the evidence about external economic shocks over the past year or two, what emerges are stories whose precise significance is unknowable. We only know that most of us have heard them many times.

However, what happens in the interface between external shocks and economic activities or why the quantity of effective or nationally retained savings falls when oil revenues rise cannot be explained by the lack of political stability.

Chile was hit hard by the 2008 2009 financial crisis foreign loans vanished and the price of copper, Chile s main export, collapsed. But this time around, the Chilean economy was in shape to withstand massive external shocks.

These, together with the external shocks triggered by the volatility of speculative capital flows, drastic terms of trade adjustments and even inflows of remittances, make the potential benefits of structural adjustment and stabilization policies difficult to attain.

PARIS Ten or 20 years ago, the existential question facing the European Union was whether it still had a purpose in a globalized world. The question today is whether the EU can respond effectively to major external shocks.

But Asia cannot be complacent financial systems remain fragile economies are burdened with high fiscal and current account deficits and Asia remains too heavily dependent on North American and European export markets, increasing its vulnerability to external shocks.

Even for those countries recently benefiting from the recovery of commodity prices, there exist significant structural weaknesses emanating from high dependence on exports of natural resources and low value added products, implying a high vulnerability to external shocks.

On the contrary, private consumption fell to a record low 45 of developing Asia s GDP in 2010 down ten percentage points from 2002. In these circumstances, immunity from external shocks or decoupling, as it is often called seems fanciful.

Today, it is the sovereign debt crisis made in Europe. The alarm bells should be ringing loud and clear across Asia an export led region that cannot afford to ignore repeated shocks to its two largest sources of external demand.

The bulk of China s 2.3 trillion in foreign reserves are held not for the purpose of protection against negative external shocks, but as savings in the form of US Treasury notes. China thus needs to preserve the value of its savings.

While these figures may be helpful in indicating how countries can harness services trade for development, developing countries remain particularly vulnerable to external shocks over which they have no control, given their over dependence on a limited number of service activities.

The project will assist national policymakers and policy shapers to develop the knowledge and skills to integrate macroeconomic and social goals in policy formulation and better utilize available national policy space to pursue development goals in the face of external shocks.

Adjustment, support to trade and trade related shocks

In short, because the RTSS made cross border capital movements much easier, short term flows have become a major factor in determining the RMB s exchange rate. External shocks affect the offshore exchange rate first, and then feed through to the onshore exchange rate.

First, were the regions to be united similar or dissimilar in terms of their economies vulnerability to external shocks? The more similar the regions, the more optimal the resulting currency area, because policy responses could be applied uniformly across its entire territory.

ECLAC, in cooperation with other United Nations partners, will undertake this study to arrive at an in depth understanding of the effects of macroeconomic and external shocks on poverty, inequality and social vulnerability, using country specific, dynamic macro micro CGE modelling analysis.

(a) Developing a methodological framework and conducting research for the countries involved in the project, enabling analysis of the mechanisms of transmission from macroeconomic policy, economic management failures and external shocks to poverty, social vulnerability and inequity through macro micro modelling analysis

These shocks were naturally beyond the ECB s control. The policy response, however, required preventing these shocks from becoming entrenched in medium to long term inflation expectations.

So it was a series of five painful shocks.

This convergence will contribute to more sustainable economic growth, with Asia s economies rebalancing toward domestic demand, especially household consumption, and thereby becoming less vulnerable to external shocks. Given the decline in export demand since the global economic crisis, this shift could not be timelier.