Another aspect making a big difference is the performance of emerging economies. Latin America, excluding Chile, posted an average annual fall of 4.2% between 1930 and 1932, while Chile, where the crisis compounded with the downfall of the nitrate industry, fell an average of 17.6%. For the three-year period 2009-2011, private forecasts indicate that Latin America will grow by an average of 1.2%, while Chile will grow by 2.1%. These are just projections, not definitive figures, but data released so far this year indicates that the effects of the crisis, although far from negligible, are much milder than they were in the 1930s. This is an encouraging fact. Usually, whenever developed countries go into a recession, its effects are amplified into our region. That has not been the case this time; on the contrary, our region today is outperforming the developed economies. That the current crisis did not turn into a Great Depression proves that lessons have been learned. Economies are much stronger, and also the policies applied have gone in the proper direction of mitigating the tremendous financial shock of last year. For one thing, the task of stabilizing the financial system was assumed decisively, which prevented its collapse. Uncertainties remain, but are more focused and less dramatic than at the end of last year.
After the collapse of Lehman Brothers in October 2008, the turmoil mutated into a full-blown financial “crisis” and many market segments seized up. The “Great Moderation” gave way to the “Great Recession”, characterised by a massive fall in industrial output and trade. BIS central bankers’ speeches  1  Policy interventions were made by central banks and other public authorities to restore and secure the orderly functioning of markets and economies. I like to think of the interventions by public authorities as “lines of defence” against the crisis. They proved successful in guaranteeing those authorities’ ability to continue delivering macroeconomic and financial stability against the crisis. Let me recall briefly the three main lines of defence: central banks increased their provision of liquidity and financial intermediation services; monetary and fiscal authorities adjusted their policies in order to mitigate the macroeconomic impact of the crisis; and governments implemented a variety of measures in support of the financial sector. The government measures adopted in response to the economic crisis – both those related to fiscal policy and those in support of the banking sector – did not come cheap. This is true not only in the euro area, but – more generally – in all advanced economies. Together with the impact on government budgets of the massive economic contraction recorded during the crisis, they led to a significant deterioration in the public finances of a number of economies in the euro area.