TIME: Finding an empty table at a Starbucks in Hong Kong on a Sunday afternoon these days feels like winning the lottery. So does getting a reservation at a good dim sum restaurant or renting an affordable apartment. While the U.S. suffers the convulsions of an impending recession and massive wealth destruction, here the malls are stuffed full and the streets bumper-to-bumper with BMWs. The good times keep rolling, and not just in Hong Kong, but across much of emerging Asia, from Shanghai to Mumbai. Sure, the U.S. turmoil has had some impact — jittery investors have knocked back stock markets from last year's lofty heights — but in general, the story of America's economic woes has been confined to the morning newspapers.
Recession? What recession?
In the past, any downturn in the U.S. economy would send Asian policy makers, businessmen and workers into cold sweats. The reason is that Asia has been so dependent on exports to the U.S. that any slowdown in demand in the American economy inevitably dragged down Asian growth as well. In recent months, however, there has been a debate raging among economists over whether the forces of globalization have weaned the rest of the world off its heavy reliance on the U.S. The hope has been that the global economy can continue to grow quite nicely even if the U.S. fell into recession.
So far, that seems to be true, at least here in Asia. Though the exact extent of America's downturn is still uncertain, the early signs tell us that Asia isn't as reliant on the U.S. as it once was. "Economies in Asia will see potential to grow at reasonably fast rates" says Robert Horrocks, head of research at fund management firm Mirae Asset Global Investments. Nigel Richardson, chief investment officer for Asia at AXA Investment Managers says that "the U.S. is still the driving force of the world economy" but "Asia is probably far more resilient than it would have been in the past."
Why is that? One theory is that the region has enough centers of growth of its own — mainly, the roaring economies of China and India — that trade within Asia can drive the region's GDP onwards even if the U.S. economy wanes. The idea is called decoupling, as if the continent has just extricated itself from an unhappy relationship. By this reckoning, America just isn't as important to the region as it used to be.
But can that possibly be the case? Can the U.S. really become economically irrelevant? Can the World Survive US Downturn? >>> By Michael Schuman | April 30, 2008
The Dawning of a New Dark Age (Paperback – USA)
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