The global slowdown has negatively affected Asia’s trade and capital flows. This has led to a rapid economic slowdown in Asia especially given the importance that trade and investments are to GDP growth in the region. To limit the depth and duration of the slowdown, Asian governments are acting quickly to address the credit gap caused by global deleveraging and the collapse in external demand. What are some of the rescue measures adopted by governments to address these problems and stimulate domestic consumption? How healthy are the domestic banking systems; will they contribute to the slowdown as in the west or be able to provide credit to support growth? What policy levers are available to governments to close the credit gap arising from weakened foreign and domestic lending and lower capital market issuances? What are the major risks for governments and corporations in this environment? In this report, Janamitra Devan, a Senior Fellow with the McKinsey Global Institute and George Nast, a partner in our Shanghai Office provide a review of the impact of the financial crisis on Asia and its implications for governments and corporations in the regions.

Authors: Janamitra Devan, George Nast, Jonathan Woetzel

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