Ramsey,
<<I don't think China's economy is large enough to replace Japan as the Asian leader at this point. >>
Agreed. China is not large enough to serve as the locomotive to pull the entire Asian train. Japan, while large enough, is not likely to experience a return to rapid rates of growth sufficient to pull the rest of the area. This is why I am not expecting a “V” type of recovery from the recession in Asia. I expect more of a slow simmering recovery that will take several years to reach a full boil. But this is good news! Remember at the start of the decade how the U.S. was mired in slow growth as we recovered from our own banking “crisis”? The press referred to it as a double, even triple, dip recession. A recovery that has its roots in internal growth based upon the consumer and not on additions to plant and equipment will be longer lasting. Again to use the last U.S. recession as an example, it was two years from the trough before fixed investment began to really grow in America.
Now certainly Asia is not America, so the comparison is not ideal. The reason I am confident in recovery is that I have faith that the stimulus applied to the region will succeed. Might we drag on the bottom for a while? Of course, but as the year progresses more and more signs of lasting recovery will become apparent. Ideal political, social and financial conditions are not necessary before Asia recovers. If they were, no economic growth would ever occur. It's kind of like my old lawnmower after sitting all winter. At first it coughs and sputters, but then it warms and the parts get lubricated. Soon it is humming along fine. Each of those sputtering piston strokes warms the engine and pumps the lubrication for later use. [My mind is turning to spring, you're lucky you didn't get a planting metaphor.]
-Robert |
