While emerging East
Asia as a whole has reduced its fiscal deficit from almost 2.5% in 2001 to just above 1% in 2006, the other Emerging Asia as a whole has seen a significant dip in deficits by almost 5%. Moreover, towering Forex reserves of major Asian economies provide them with the much needed cushion against currency depreciation, which the Asian economies lacked during the Asian Financial Crisis years. Finally, the buoyancy of growth and robust consumer demand might off set any hardship to a large extent. As Ping Chew, Credit Analyst, Standard & Poor’s, explains, “Asian economies have improved their banking systems, reined in fiscal deficits, brought down external debts, built up foreign exchange reserves, and improved their current account balances.” The fact is that the Asia that we see today is fundamentally better armoured than the one in the late 90s. And one hopes it remains that way, unless of course, our brilliant regulators wake up! thin line wherein the liquidity injection has been in the form of overnight lending to the banks. Th is has not only re-liquefi d the market, but has ensured that the Fed and other central bankers (along with the cut in the discount rates) do not have to entail a broad based liquidity expansion.
For Complete IIPM Article, Click on IIPM Article
Asia as a whole has reduced its fiscal deficit from almost 2.5% in 2001 to just above 1% in 2006, the other Emerging Asia as a whole has seen a significant dip in deficits by almost 5%. Moreover, towering Forex reserves of major Asian economies provide them with the much needed cushion against currency depreciation, which the Asian economies lacked during the Asian Financial Crisis years. Finally, the buoyancy of growth and robust consumer demand might off set any hardship to a large extent. As Ping Chew, Credit Analyst, Standard & Poor’s, explains, “Asian economies have improved their banking systems, reined in fiscal deficits, brought down external debts, built up foreign exchange reserves, and improved their current account balances.” The fact is that the Asia that we see today is fundamentally better armoured than the one in the late 90s. And one hopes it remains that way, unless of course, our brilliant regulators wake up! thin line wherein the liquidity injection has been in the form of overnight lending to the banks. Th is has not only re-liquefi d the market, but has ensured that the Fed and other central bankers (along with the cut in the discount rates) do not have to entail a broad based liquidity expansion.For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2007
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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