Asian Economy

In reference to the current events unfolding, as we witness all Asian markets plummeting by overwhelming percentage, liquidity in the market tightening and most of the Asian banks raising the interest rates, we need to re-evaluate the future of Asian growth.

Most of the financial experts agree on the fact that we have not peaked out in Asian growth and that we are still in Bull Run, punctuated with strong and sharp corrections. But there are some factors looming over our heads that will keep spooking the market from time to time. First being the fuel price soaring, second being the ‘Godzilla’ of American economy in a disturbed mode. We can associate both this factors to readjustment of American economy. USA has to find alternative energy sources; they just cannot keep guzzling the oil. That is the biggest factor affecting the inflation and with cascading effect, the interest rate. This will keep CPI numbers going down and push them into stagflation and possible economic slowdown.

This cannot but affect the global market, especially Asian markets. The prime reason behind this is that Asian economy is driven by American consumers and American dollars ($). This American phenomenon will not affect to European markets as much, simply because of their lack of dependence on American dollars ($). This can be credited to their innovation for unifying European economy under the umbrella of Euro (€). So this is about time that the Asian countries leave their differences behind for the greater good and bring the dream into reality: fabricate SAFTA and umbrella Asian currency. Asia just has to go forward with it, as it is the quintessential factor of stabilisation and sustainable development. To counter the American ‘Godzilla’ Asian ‘King Kong’ has to be forged. As size is everything. And at this time, when the global balance is shifting to Asia, unity is the only way forward.

Another reason why Asia needs umbrella currency is that Asia has the biggest population, with India and China on its map. The umbrella currency would only boost the consumerism in Asia. With this consumer base Asian growth should not be dependent on American consumers. Asia can have its cake and eat it, too! But not without forfeiting unwarranted vanity. Asia has to think a lot and act even more and without further ado.

- UMESH SANT