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In the aftermath of the Lehman Brothers collapse in September 2008, drop in the supply of trade finance, a critical engine for trade transactions, has become an acute concern for the development community. Banks were increasing pricing on trade finance transactions to cover increased funding costs and higher credit risks, and trade was dropping drastically in most countries, with global trade projected to decline in 2009 for the first time in decades. Yet, little was known about the real impact of the crisis on developing country's capacity to export. The World Bank has commissioned a firm and bank survey on trade and trade finance developments in developing countries during the first quarter of 2009 to collect field information. In total, 425 firms and 78 banks were surveyed in 14 developing countries across five regions. This paper summarizes the findings of the survey as well as discusses the type of policies governments and international organizations put in place to mitigate the impact of the crisis. In sum, the survey findings confirmed that the global financial crisis has constrained trade finance for exporters and importers in developing countries. But the impact varied by the firm size, sectoral activity, and countries' integration into the global economy. In particular, SMEs were particularly affected, and export diversification was made more difficult, especially in low income countries. Nevertheless, drop in demand has emerged as the top concern of firms at the time when the survey was conducted in March-April 2009.

Access to Finance --- Banking sector --- Banking system --- Banks --- Banks and Banking Reform --- Capital base --- Capital markets --- Commercial banks --- Debt Markets --- Down payments --- Economic conditions --- Economic Theory and Research --- Emerging Markets --- Emerging markets --- Export Import Banks --- Finance and Financial Sector Development --- Financial systems --- Foreign exchange --- Insurance --- Interest Rates --- Inventory --- Investment banking --- Private Sector Development --- Profitability --- Retained earnings --- Trade flows --- Working capital

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The authors estimate a VAR and compute generalized impulse response to analyze the joint dynamics of four key macroeconomic variables in the small open economy of Mauritius. Results suggest that nominal exchange rate and interest rate have limited ability to impact output growth over the medium-run. Large error bands hinder analysis of the inflation output trade-off, but evidence points to a weak relationship in the short run as well. These findings are used to shed some light into the policy response to the current worldwide economic slowdown affecting Mauritius.

Banking sector --- Capital base --- Currencies and Exchange Rates --- Debt Markets --- Economic Stabilization --- Economic Theory and Research --- Emerging Markets --- Exchange rates --- Exchange rRate --- Export performance --- Finance and Financial Sector Development --- Human capital --- Inflation --- Interest rate --- Interest rates --- International capital --- International capital markets --- Macroeconomic management --- Macroeconomic variables --- Macroeconomics and Economic Growth --- Monetary policy --- Open economy --- Policy response --- Preferential market access --- Private Sector Development --- Real exchange rate --- Trading