Asia

Regional Outlook for 2010 Continues to Trend Upward

The global economic recovery gained momentum in the fourth quarter of last year but recent data once more underscore that the recovery will not be a strong, decisive rebound but rather a gradual and fragile process. While the United States, Japan and China surprised to the upside, the Euro area disappointed with a weaker-than-expected reading. Moreover, whereas growth figures from China once more highlighted the resilience of the Asian economy, the U.S. numbers still exhibit several weak spots, as growth was mostly driven by an adjustment of inventories, an effect that will inevitably wane in the coming quarters. In the Euro area, the economy continued to expand in the final quarter of the year, although at a very weak pace. More importantly, the gap between strong and weak economies continues to widen and the more vulnerable economies (memorably called PIIGS: Portugal, Ireland, Italy, Greece and Spain) are increasingly causing alarm among investors over their massive fiscal deficits. In fact, the necessary intervention by International and European institutions in Greece underscores the difficulties in store for the single-currency zone. Nevertheless, with the balance of the global outlook on the positive side, prospects for growth in Asia in 2010 continue to improve steadily, with all major emerging Asian economies experiencing a sound recovery this year.