New York University economics professor Nouriel Roubini thinks Asia’s export-driven growth model is “broken,” and nations in the region need to do more to boost domestic demand.
From Bloomberg: “The old model of export-led growth is broken,” Roubini said in an interview with Bloomberg News yesterday. Unless policy makers find ways of stimulating consumption and private domestic demand, then the growth recovery is going to be, even over the medium term, weaker than otherwise.”
Asia’s developing economies are almost twice as reliant on exports as the rest of the world, with 60 percent of their overseas sales ultimately destined for the U.S., Europe and Japan. The International Monetary Fund yesterday said it expects recessions this year in South Korea, Singapore, Taiwan, Malaysia and Thailand.
“Asia has to find a new model of growth,” Roubini said in Singapore, where he is attending a conference organized by Bank of America-Merrill Lynch. “This is happening too slowly and this will make Asia’s recovery lag.”
Asia’s main export markets have experienced a significant contraction in demand since the implosion of the banking system last year. Domestic consumption is seen as a key factor in getting the continent out of the current downturn.
Speaking at a seminar last week – ADB President Haruhiko Kuroda, whose company’s main role is lending to alleviate poverty in developing Asian nations said: [via BBC] “Over the longer term, developing Asia is starting the process of rebalancing growth from excessive dependence on external demand to greater resilience on both consumption and investment.”
The ADB is predicting growth of 3.4% in Asia for 2009 compared with more than 9% in 2007.
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