Although this crisis largely originated in the advanced economies, it may also have significant implications for emerging market economies. For example, low interest rates in advanced economies can swell capital flows to emerging market economies, while distressed banks may curtail their cross-border investment. Moreover, an economic slump in the advanced economies squeezes emerging countries’ export chances.
Mexico has assumed the G20 chairmanship at a time when the financial crisis, and in particular the sovereign debt crisis in the euro area, are putting a severe strain on global growth. Progress on the G20 agenda could contribute significantly to avoiding another global recession and to promoting sustainable global growth.