Asian nations emerge from recession as stronger economic powers
Friday, May 14, 2010
SINGAPORE -- The economic recovery that rocketed through Asia starting last year has been felt in the usual ways -- a thickening parade of cargo ships around this trade-driven city-state, rising real estate and stock prices -- but it was demand for personal computers in Indonesia that caught the attention of executives at computer memory maker Showa Denko.
Even with U.S. and European consumers controlling their spending because of fears over the economy, the company boosted production and began building new manufacturing lines on the basis of expected growth in Asia. That dynamic shows the contours of the post-crisis global economy and the challenges President Obama faces in his effort to double U.S. exports.
U.S. sales abroad jumped by more than 3 percent from February to March, the Commerce Department reported this week, although imports jumped even more and the trade deficit grew slightly. Still, the administration is focused on exports as a source of new jobs, and it is hoping to encourage the trend with such initiatives as a trade mission to Indonesia and China this month being led by Commerce Secretary Gary Locke.
A rebound in exports from the lows of the recent recession was to be expected. The key to reaching the plateau set by Obama -- $3 trillion in annual exports by 2015 -- will be expanding the U.S. presence in Asia.
But right now, Asia appears to be doing fine on its own. It is the one region of the world that is relatively stable, largely free of the banking and debt troubles that have filled the streets of Athens with enraged demonstrators and forced Spain to cut wages, provoking the country's largest labor union to announce strike plans Thursday. Portugal responded with plans to raise taxes and cut pay for its government workers.
Asia, with its middle class rising, has led the world out of a recession. Its economies are also integrating faster than expected, with an abundance of projects and new trade agreements promising to accelerate the process. Economists, businessmen and politicians here say the United States risks being a step behind in a region increasingly able to turn raw materials into consumer and capital goods that it sells to itself.
"Who is going to double their imports? It's not clear," said Ravi Menon, permanent secretary at Singapore's Ministry of Trade and Industry. He said the rising demand in Asia for appliances, clothing, consumer electronics and household goods won't be of much help to U.S. businesses.
"We have seen demand rebound, but it is very much supported by emerging countries: China, India, Indonesia," said Masanori Kudo, senior vice president at Showa Denko, a Japanese conglomerate. Its Singapore-made hard-drive components are shipped to computer makers in such places as Taiwan for final assembly, an example of how production has been integrated across the region.
The addition of rising Asian consumer demand, the IMF reported recently, marks a historic turn.
"This is the first time Asia is leading a global recovery," the IMF wrote in a recent report, with growth based not just on exports but also on "resilient domestic demand" and a strong surge in investment.
There is indeed a broad sense here that the collapse of Lehman Brothers and the subsequent crisis marked a shift in the world's economic center of gravity.
The United States remains by far the world's largest economy, a critical market for other nations and central still to Asia's growth prospects. It also is still the world's top exporter of goods and services, although China is closing that gap.