Asia – outlook after the crisis

Asia's emerging markets have weathered the most severe global financial and economic crisis witnessed since the Second World War far better than one would have imagined only just over a year ago. And that's not all: Asia was also the first region in the world to experience a considerable recovery in economic activity last year. So it is by no means an exaggeration to say that Asia played a key role in steering the global economy out of the toughest recession in decades. It does actually come as something of a surprise that, of all regions, Asia, – renowned as it is for its heavy reliance on exports – was the first to clamber its way out of recession, while at the same time those countries that happen to be Asia's main export markets had literally collapsed. There are two main reasons behind this phenomenon:

First, Asia's financial institutions held hardly any investments in problem loans and bonds, unlike their US and European counterparts. This means that the local financial systems in Asia were able to continue functioning normally and providing the economy with loans, even during the worst phase of the financial crisis in the six months spanning the winter of 2008/2009.

Second, the rapid and very dynamic recovery witnessed in Asia's emerging economies owes itself to the very fast and aggressive action taken on the monetary and fiscal policy front. A long period of very stability-oriented fiscal policy, at least in most countries, gave many governments considerable room for maneuver, allowing them to both develop and then implement extensive economic stimulus packages within a very short space of time.

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