The Centennial Resilience Index: Expanding Its Coverage and ...

Figure14Fiscal Policy Score for selected groups of countries11511010510095AdvancedeconomiesEMCsAll9085199719981999200020012002200320042005200620072008200920102011Source: Centennial Group International, Resilience Index.the private sector and its rate of change have beenadded to have a more comprehensive measure ofprivate credit expansion and its possible effects onasset bubbles.IV. Results of the updateThe updated—though preliminary—estimates ofthe Resilience Index for EMCs and new calculationsfor the advanced countries are summarized in Figure11. They confirm that many EMCs had significantlystrengthened their resilience to external shocks priorto the global financial crisis. They also show a considerablesteady deterioration in the Resilience Indexof the advanced countries, particularly since 2003(Figure 12 and 13).Not surprisingly, the major decline in the FiscalPolicy element since the global crisis stands out for allgroups of countries (Figure 14). This decline reflectsthe revenue weakness associated with the recessionand continued sluggishness of economic activity aswell as the impact of the fiscal stimulus packagesadopted by a great number of countries. The revenuedeclines, in particular, have led to large increasesin public debt, a key input for this element. In manycases, these increases have resulted in considerablepublic finance difficulties, which are leading to, orthreatening to lead to, major crises in certain countries.It should be noted, however, that policy makersof many EMCs slowed the anticipated unwinding ofthe fiscal stimulus packages in the face of weak economicgrowth resulting from the continued sluggishnessin the demand for their exports.Turning to the EMCs, Figure 15 presents theResilience Indices for a number of selected countriesthat had strengthened their resilience significantly