Source: chinadaily
Published: 2009-09-08 10:07:52
      by Xinhua Writer Zhou Erjie

      HONG KONG, Sept. 7 (Xinhua) -- One year after the financial crisis began to hit the United States and ravage the world economy, Asia's emerging economies start to rebound faster than expected, and show signs of leading the way out of the slump.

      Recent indicators showed the region's recession-hit economies outpaced the United States and Europe in the rebound -- several emerging economies which have reported GDP figures for the second quarter grew by an average annualized rate of more than 10 percent.

      The Chinese economy expanded 7.9 percent year on year in the second quarter, thanks to multi-billion dollar stimulus packages and record lending. Surging exports and fiscal spending fueled growth of 2.3 percent for South Korea's economy in the three months to June, its fastest rate in more than five years.

      Indonesia's economy grew 4.4 percent in the second quarter of 2009 year-on-year, mainly supported by increasing government and household spending. Singapore and Hong Kong have also returned to the growth path despite sluggish global demand.

      For other telling signs, industrial production growth has moved away from recent lows in Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. In Indonesia, consumer confidence rose during the first six months of the year. Purchasing managers' indexes in China and Singapore have been on the rise as well in recent months. According to Barclays Capital, emerging Asia is the only region in the world where output has regained its level before the crisis.

      ASIA HELPS ITSELF

      When Asian economy was worst hit earlier this year, many analysts said the impact on Asia showed that the export-dependent region heavily relies on the demand of the West, and there could be no recovery until the industrialized economies had rebounded. Later, an IMF report predicted Asia's recovery would only be "tepid" because the developed economies would remain weak.

      However, the reality seems to have showed the other way around. Asia grows faster than expected despite that the developed countries are still struggling to rebound.

      Central banks in Asia have aggressively reduced policy rates as well as introducing a variety of other measures to increase liquidity in the banking system and to encourage banks to expand lending. These measures clearly worked.

      Favorable monetary conditions in China have seen bank lending surge in the first half of 2009. Bank Indonesia reduced its policy rate seven times since the beginning of 2009 -- from 9.25 percent to a record low of 6.75 percent. The Philippine central bank also took a gradual approach to cutting its policy rate -- reducing it six times since December 2008.

      Asian governments came into the crisis with a strong fiscal position and relatively low debt which allowed them to react rapidly and aggressively, said Mark Williams, an economist with consultancy Capital Economics.

      This has certainly helped shore up growth, and continued loose fiscal policy could play a role in supporting domestic demand in the next few years, the economist said.

      Government stimulus measures are likely to have a short-term impact, but what to do if they have run their courses?

      The crisis is an opportunity to look at longer-term issues to sustain Asia's economic rise, said Jong-Wha Lee, Chief Economist of the Asian Development Bank (ADB).

      It's unlikely that Asia can export its way out of this slump. This crisis clearly shows that Asia cannot rely only on external demand but must diversify its sources of growth and revive its domestic industries, he said, adding that the process of rebalancing growth may take more than ten years.

      Building up the demand of Asian countries, both domestic and intra-regional, is crucial to help Asia recover more quickly than the rest of the world, the economist said.