Asian nations should increase dialogue over economic concerns
Simon Tay says that Asian nations, faced with capital outflows to the US and Europe and slowing growth, should step up dialogue over shared economic concerns to avert crisis
After the global financial crisis, Asia grew at more than 6 per cent each year, outperforming a troubled world. And not just China, but also India, Asean and others. While the United States and Europe floundered, the gravity-defying feat substantiated the idea of Asia's rise to close the gap with developed economies.
Now gravity seems to be catching up with Asians.
Growth in China has slowed as the new leadership rejigs policies to discipline credit and spending - much needed reform to cut wasteful projects and secure the financial system. The government targets 7.5 per cent growth. Still good, but a far cry from the days of double-digit rates.
Indian expectations are even lower after visible missteps combined with a current account deficit around 5 per cent of gross domestic product. Spooked investors and capital outflows have led to the rupee tanking.
Similar symptoms show in Indonesia with the current account deficit shooting past 3.5 per cent of GDP in the second quarter. In past weeks, the rupiah has fallen below the psychological threshold of 10,000 to the US dollar even as officials offer reassurance.
Asian capitals promise action and deny crisis. Perhaps. Triggers for the slowdown do differ from one country to another. Emerging signs, however, show macro conditions are changing, and bringing Asian economies under new stresses.
