World Bank Increases Aid

The World Bank will increase aid to developing nations.Aid may reach 35 billion dollars by the end of June,versus 13.5 billion last year.The bank is prepared to commit up to 100 billion over the next three years,as the financial crisis threatens to cut government revenue,reducing public spending on education and health care.The growth forecast for developing countries is a drop of 0.1 in 2009,versus a gain of 1.4 in 2008.Global trade may fall for the first time since 1982.A 10% drop in developing country growth means another 20 million people will live in poverty.In recent years,high food and fuel prices have driven about 100 million into the ranks of the poor.The World Bank,led by President Robert Zoellick,has received loan inquiries from countries in Asia and Latin America this year,and would not be surprised to loan to nations it hasn't heard from in some time,given the global downturn.

Asian Highlights

Andrew Freris of BNP Paribas says that,in terms of balance sheet fundamentals,Asia has been essentially unaffected by the subprime mortgage problem.Asian central banks have been free to focus on inflation.Japan was a lender,so it is in better shape than the U.S.,which was a borrower.Singapore isn't much exposed to the declining U.S. export market.Medium term,Mr.Freris likes Asian financials.The Korean banks are the cheapest in Asia.Nonetheless,central banks in Australia,Japan and India have injected capital into their banking systems to counter instability in their financial markets,which have been troubled by the Western financial crisis.