Could todays crisis in East Asia cause world recession or worse?
Some see similarities with 1929 when the stock market crash ushered in an era of depression. Britain abandoned the Gold Standard. The pound, which was then world’s major currency, was devalued, making British products cheaper to foreigners. Other countries panicked. They rushed to devalue their currencies too. Protectionism flourished, as countries tried to shelter industries from foreign competition. World trade collapsed, falling by 60% between 1929 and 1931. That exacerbated the economic slowdown and the depression continued until the Second World War. The political climate in the 1930s was very different, as the world prepared to go to war. International co-operation to try to end the world’s economic difficulties failed. But that experience led, as the war drew to a close, to the creation of the International Monetary Fund and its sister organisation, the World Bank. The post-war economic order The Bank’s job was initially, to provide loans to help reconstruct Europe after the war
