Growth and grievances

The economy ‘stupid’ is operating. Asia seems to have successfully beaten the recessionary trend and is well on the path of registering an average of eight per cent growth rate. Along with this welcome news, of course, is an irresistible concern.

Soaring inflation will not only create immense social problems, but also keep respective governments on the edges. Thus, any effort to subsidise food and civic amenities will come with a bill that many of the governments would not be able to foot. Nonetheless, the very fact that microeconomic indicators are stabilising goes on to suggest the confidence the corporate and the nationalised financial institutions have in the polices of their governments, and can well be channelised to address microeconomic necessities in a comprehensive manner.

The 2011 Asian Development Bank report has rightly forecast that the region would expand solidly over the next two years. Its contention that stronger economic links between developing countries could offset reduced demand for goods and services from recession-hit richer countries is worth debating. The two major economies of the region, China and India, are poised with a leadership role and should go at lengths in not only building bridges between the dispossessed East, but also the struggling economies of the West. Japan, which is recollecting from the tsunami debacle, is all set to catch up with the activity as the third major economy of the corporate globe. Greater interaction among the Asian economies, especially the ASEAN, for rebuilding Japans Honshu state could set in a snowball reaction of demand and supply, surging growth and investment profiles across the region. This is a perfect example of finding an opportunity in disaster.

Two other geographies that need to be monitored in due course of time are those of the Middle East and Europe. Though the United States is also not out of the woods, the wave of 2012 presidential electioneering and big money business will keep it afloat. A new war over the horizons of North Africa in Libya, which could spiral in one of the biggest human exodus into southern Europe, will be a test case for policy makers of the West. The tables of growth and sustainability can turn upside down if the conflict impacts free flow of oil across the Mediterranean and the Mideast. Asias growth hype will then come to a naught inadvertently.

Khaleej Times

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