This meant that banks were in a position to continue lending and supporting domestic activity even in an environment of tight global liquidity (Chart 10). •  Another important financial plus for the region is this. Previously, when global liquidity dried up, Caribbean countries were shut off from international funding and this impacted productive investment and sometimes forced cutbacks in government expenditure.
While China has taken policy steps to limit the extent of the slowdown, there is an evident tension in policy between reform and stimulus, and the effect of the stimulus may already be waning. Vulnerabilities – such as excess capacity, elevated corporate debt, and risks in the shadow banking sector – appear to be building, and could pose continued risks over the medium term.