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The global economy continued to lose momentum during the first nine months of 2008, as turmoil in global financial markets, coupled with heightened inflation, significantly reduced aggregate demand. The ongoing subprime mortgage market crisis that began in the latter half of 2007 intensified immensely during the third quarter of 2008, evidenced by the failure of several large US-based financial firms. This distress in US financial markets quickly spread to other advanced economies, affecting a number of international banks and as a result, the developed world experienced a significant economic slowdown. However, moderate growth was maintained by emerging markets, on which the effects of the financial crisis were less severe.