The Hindu Business Line : Resilience of Asian economies

Apropos the article Staying calm during the storm” (Business Line, November 10), the resilience of the Asian economies can be attributed to the better regulations, higher saving rates and the need-based growth due to the populous nature of their countries.

When the US suffered due to over-leveraging of its financial institutions, Asian banks and financial institutions have lower net NPAs, and their capital adequacy ratios have been maintained at more than 12 per cent. Naturally, these economies do not suffer from over-leveraging problems.

The problem faced by China and India was, in fact, higher inflation as a result of higher GDP growth of more than 9 per cent in the past few years, warranting a tight monetary policy rather than lower interest regimes.

However, the export of the US crisis has resulted in abrupt withdrawal of western investments to meet their own needs, which resulted in a stock market crash, leading to contraction of capital needed to oil the continued the growth process, and the resultant liquidity crisis.

Thanks to the recent multilateral steps taken by the Government and the regulators, Asian economies are capable of weathering the storms as their economies are fuelled by needs rather than troubled assets in their systems.

It is, therefore, obvious that while growth may contract, the opportunities posed by the lower valuations of assets as an outcome of the stock market crash and bursting of the real estate bubble will lead to a revival of domestic investment. The next boom will be from Asian economies, which are expected to fuel the growth of the world economy.

P. E. Muthu Mumbai

More Stories on : Letters | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
AS on local bodies

Wrong direction

Creepy acquisition

Chennai, New Delhi and the Tamil cause in Sri Lanka

Should competition law focus on `concentration'?

The financial crisis will hit our aging agenda hard

Road to global relevance?

Resilience of Asian economies