The global financial crisis has hit emerging and developing economies extremely hard. Output, exports, remittance flows, aid and capital inflows have all been lower than expected. For some people in the poorest economies this has been disastrous.

Lower employment rates and a lack of social safety nets mean that poverty is higher than it would otherwise have been. Although the worst of the crisis appears to be in the past, its effect on emerging and developing economies will be sustained well into the future.

The aim of this paper is to set out estimates of the cost of the global financial crisis to emerging and developing economies. The financial collapse of 2008 and 2009 produced the worst global recession since the 1930s. Demand in advanced economies slumped, despite efforts by governments and central banks to support it through easier fiscal and monetary policies. Inevitably, this has had severe negative consequences for emerging and developing countries.

We would like to catalogue the human costs of the crisis, in terms of lost jobs, lost income, reduced consumption levels, increased poverty and reduced education opportunities, but much of the data needed to do so is not yet available. So we focus instead on macroeconomic indicators. There have already been some attempts to estimate the effects of the crisis, particularly on output, but we extend that analysis to encompass its effects across a range of variables: output, exports, remittances, aid and capital flows.

One problem with this type of analysis is that we can never be sure what would have happened had the financial crisis not occurred. In some cases, such as output growth, it might be reasonable to assume that the rates recorded immediately prior to the crisis would have been sustained. In others, this will not do; some reasonable estimate has to be made of the underlying trend ahead of the crisis. The fact that some developments in the global economy prior to the financial crisis were unsustainable also has to be taken into account.

It is also the case that the effects of the financial crisis will probably linger for several years, so current estimates of its impact on emerging and developing economies rely to some extent on forecasts of the future. These appear, for the most part, optimistic. Should they prove wrong - for example, if the advanced economies experience a 'double-dip' recession or an extended period of little or no output growth - then estimates of the severity of the effect of the crisis on emerging and developing economies will need to be revised upwards.