We asked our readers last week about the prospects for economic growth in Asia during the coming quarter. Most said that we are probably in for more of the same, while the rest were split evenly between pessimists, who foresee a correction, and optimists, who expect conditions to improve and growth to pick up.
The confusion is hardly surprising. The threat of sovereign defaults in Europe and even the US are not encouraging signs for the global economy, yet markets have avoided panic so far and most analysts are cautiously optimistic that Asia’s key economies are fundamentally sound. So, a lot depends on what happens on the other side of the world.
Most old hands seem relatively sure things will muddle through for now. Politicians in America will probably dodge a credit event by agreeing to lift the debt ceiling, in return for spending cuts and a promise not to raise (some) taxes. Even inept leaders cannot keep America’s economy down for too long.
In Europe, such strength is mostly underwritten by Germany’s economy. The latest Greek bailout has eased immediate concerns but done little to improve the medium-term outlook — in which the EU and its members must face tough questions about the nature of their sovereignty and their commitment to the union, in whatever form it takes.
Faced with such remote and unprecedented threats, it is easy to understand why our readers are so unsure about the outlook in Asia. As ever, their fate is in the hands of distant politicians.