Emerging Asia: Are We Witnessing The Seeds of Change?

At the start of 2009, the general expectation was that emerging Asia (ASEAN, China, and India) would lag the recovery in the developed world. This view stemmed from the dependence of these countries on exports for growth. Though geographically contiguous with the second and third largest economies in the world — Japan and China — it was considered unlikely that the region could find a substitute for the falling consumer spending in western nations.

Contrary to this belief, emerging Asia rebounded strongly starting in the second quarter of 2009, earlier than the West. This strong recovery has not only belied expectations, it has also raised some new questions: Is this recovery too good to be true? Does the strong rebound imply a decoupling of Asia from the rest of the world? What will be the key drivers of growth for these economies in 2010 and beyond? These questions need to be seen in the broader context of the structure of these economies and the nature of the current recovery.

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