Le Point International

During the 2007-09 financial crisis, the euro area quickly suffered an impact through the financial channel. The key reasons were that European banks were deeply exposed to US distressed assets and they were also heavily leveraged. Asian banks had fortunately avoided European excesses. However Asia was brutally hit after the Lehman Brothers collapse by the sudden fall in global trade and the reversal in capital flows. On the whole, Asia suffered severely from the global financial crisis: from 2007 to 2009, the GDP growth rate fell by 8.6 percentage points (pp) in Japan, 5 pp in China, 4.8 pp in Korea and 4.6 pp in ASEAN-5.

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