A photo finish or...

Thanks to aggressive monetary stances and bold fiscal measures, the bottom of the global downturn finally seems in sight. Even the OECD’s composite leading indicators signal that the worst is over. But, the moot question now is how quickly economic activity can return to the pre-crisis levels. Though, different structural characteristics of key economies put them on different recovery trajectories, but going by the pace of recovery across economies one can easily figure out the three frontrunners – China, India and Indonesia – heading for a photo finish. In fact, galloping ahead with ease China remains the biggest and brightest example of the Asian growth miracle. After expanding at a breakneck pace during the boom, the dragon economy has managed to grow at a still-stunning rate in a year that saw most of its global peers falling into recession. “Though exports remain the only drag on China’s GDP this year, but the rise in domestic demand should more than offset the negative effects, allowing the dragon to continue growing at an enviable pace,” avers Sherman Chan, Moody’s Economy.com. Even, the elephant nation has shown promising signs in recent months. In the March quarter, despite a region-wide GDP slump or sharp slowdown, India’s performance remained steady. Indonesia, the largest economy in the ASEAN region, also rounds out the category of ‘lucky escapees’. Like China and India, Indonesia is forecast to expand at a solid pace this year, with more buoyant results in 2010. However, Japan, the weakest link in the region, still continues to crawl. Though, the Tankan diffusion index for large manufacturers, which measures business confidence in Japan, improved in the June quarter, but the rebound from a reading of -58 to -48 was far from reassuring. Nevertheless, the positive point is that all major Asia-Pacific economies are expected to grow in 2010.

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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