IMF to help emerging economies
The International Monetary Fund is in talks with developing nations desperately in need of loans to keep their economies afloat. As Ashley Milne-Tyte reports, the root of their problems is us.
Pakistani sugarcane vendors wait for customers. Pakistani officials are to meet International Monetary Fund representatives, because the country needs billions of dollars to stave off an economic meltdown. (Farooq Naeem/AFP/Getty Images)
More on The Economy, International, Politics, America's Financial Crisis
TEXT OF STORY
Kai Ryssdal: It's not just developed economies that are getting tripped up by the global slow-down. The International Monetary Fund is in talks with a couple of countries that desperately need loans to keep their economies from hitting the rocks. Pakistan, Hungary, Iceland and Ukraine are among the countries officially in discussions with the IMF.
But plenty of others are feeling the pain too, including relative success stories in the developing world like Turkey and Brazil. As Ashley Milne-Tyte reports, their problem is us.
Ashley Milne-Tyte: Until last year there was plenty of money flowing into emerging markets from wealthy nations. Francisco Larios is chief emerging markets economist at Decision Economics.
Francisco Larios: Investments in things such as infrastructure spending, factories, as well as uh, you know, a number of financial instruments.
But as economic problems hit the U.S. and Europe, investors are pulling their money out of developing countries and putting it into US treasuries or cash. Larios says it's partly an increased aversion to risk thanks to the economic turbulence in the west. But also he says, investors recognize that the rich world's ill fortune will affect the poorer countries.
Larios: The U.S. and Europe will be buying less from the rest of the world than they were buying a year or two years ago.
Stock markets in developing countries have fallen sharply. Suddenly there's far less money to keep things running. So many countries are applying to the IMF for loans. The fund says it has more than $200 billion at hand. James Barth of the Milken Institute says it's in the economic interests of the U.S. and other wealthy countries that the IMF obliges -- fast.
James Barth: If the United States wants to export goods and services to other countries it obviously needs those countries to be in pretty good financial condition to be able to actually purchase those goods.
If emerging market economies flounder, Barth says, it'll only worsen the recession in the rich world.
In New York, I'm Ashley Milne-Tyte, for Marketplace.
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