CHAPTER 119 Focus of Concern: Emerging Asia at Risk1

For much of the past five years, emerging Asia (EA) has been host to cheap money inflows. This came about as a result of quantitative easing (QE) measures by the US Federal Reserve Bank (Fed), augmented by the European Central Bank’s (ECB) own QE actions, and lately, sustained through Japan’s unique QE program following “Abenomic” thrusts to undeflate its 20-year period of deep sleep. Most of these monies reflected deliberate moves by global institutional investors, leery of low yields in Western markets, as they poured cheap borrowed funds into the region.

While the going was good, EA was in the midst of shifting to a more precarious phase of evolution as its pace of growth slackens, certainly in China and India, not unlike their non-Asian BRICS partners (Brazil, Russia, and South Africa). China could still hit its official target 7.5 percent growth in 2013 (7.7 percent in the first quarter of 2013 and 7.5 percent in the second quarter of 2013). Growth in India has slipped to 4.4 percent in the second quarter of 2013 (against below 5 percent for fiscal year ended March 2013 and at one-half its annual rate between 2005 and 2008). Russia and Brazil (each at 2 to 3 percent) are barely expanding against what they did in boom times, while South Africa has surely slipped away—less than 3 percent in 2013. Collectively, BRICS will still grow 4 to 4.5 percent in 2013, while ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, and ...

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