Some people thought that Asia, with high growth rates, huge trade surpluses and substantial foreign reserves could be less affected by the economic storm which originated in the West. Yet, a number of economic indicators show us that Asia in fact could not avoid being hit by such a global disaster because of the fact that it heavily depends on West to fuel it's own economy. For example, exports contribute 45% of Asian countries’ economy and out of these exports, western consumers count for a half of it.Western investors are also the major players in the Asian markets. The depreciation of Asian currencies caused a huge loss on currency-hedging products. Even so, Asia - the source of one third of global GDP - can play a crucial role in bringing the economy back to the prosperity.
Dominic Barton, the director of Mckinsey’s Shanghai office, shares with us his opinions about how Asia can re-engineer and design its economies in his article - "Asia’s future and the financial crisis,” published on The McKinsey Quarterly. These solutions include: boost domestic demand, accelerate intra-regional trade and investment, and strengthen local and regional financial markets. These ideas give the leaders in Asia a general direction towards which they can work and make sure that they do NOT make the same mistakes that their western counterparts have committed. Based on the initial outcome of the economic stimulus plan, Chinese Premier Wen confidently promised that China can be the first country in the world recovering from this round of economic crisis. This also sends out a message that the financial storm will be eventually over, and Asia can take the lead!
Read the full article of "Asia’s future and the financial crisis" here.