Asiana21

ASIA’S SUSTAINABLE GROWTH

Emil Salim

The Jakarta Post, February 19, 2010

Indonesia as part of Asia suffered economic crises in 1997-1998 and 2008-2009. The first crisis was severe and practically wiped out most of Indonesia’s major economic achievements.

Indonesia’s response to the crisis by tightening monetary policy and raising interest rates created a deep drop in Indonesia’s growth rate by 13 percent during 1998. Since then, Indonesia has slowly recovered from this deep crisis.

But then a second crises, originating from the US sub-prime credit system, hit the Indonesian economy in 2008. This time the road of fiscal stimulus has been followed to prevent a serious recession. Indonesia’s robust export growth, as is the case in Europe and many other economies, has been hampered by a waning US economy.

This means that economic leadership from the US is unlikely to come for years to come.

It is hence with great anxiety to discover that Japan’s GDP of US$5.1 trillion surpassed China’s GDP of $4.9 trillion in 2009. The Japanese government’s stimulus measures apparently stimulated its exports and global trade, accompanied by rising household domestic spending.

Meanwhile China’s economy grew by 8.7 percent in 2009. On the other hand, the European economy is struggling with the financial crises in Greece and a low growth performance in Germany.

Given all these projections, it can be predicted the gravity of the global economy will move to Asia with China and Japan as the major driving forces.

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