Adjusting to recession: Will the poor recover?

This briefing paper examines the issues affecting LDCs and highlights the opportunities presented for the alleviation of poverty in the context of adjustment. Most developing countries (LDCs) have increasingly found it necessary to adjust their economies to adverse developments in the world economy. Since the first oil price rise in the early 1970s, devaluations and cutbacks in public expenditures have been commonplace. While the recent falls in oil prices have provided some relief to non-oil producing countries, their prospects continue to be uncertain. Most commodity prices are depressed, debt servicing costs are still at a high level in relation to export earnings and the outlook for aid and other financial flows is at best unpredictable. 'Adjustment' therefore remains firmly on the policy agenda of most LDCs. Moreover, the oil producing LDCs themselves are now being forced to take painful adjustment measures.