Asian Stimuli Packages

Everyone was eager to see the outcome of the Asean+3 summit in Pattaya, Thailand last weekend but it was not to be. (Asean + 3 are the 10 South Sea Asian countries plus China, Korea and Japan). The Thaksin's (the former Thai Prime Minister) supporters created a mayhem and caused the Asian leaders to evacuate from Pattaya. The Malaysian Prime Minister on his debut summit as PM had to take the flight home too.

The protesters succeeded what their counterparts in London failed to do at the G20 Summit earlier this month. Now what will happen to Thailand? All the intending tourists will seek alternative vacation places and the Thai economy will surely not see a quick recovery soon.

Prior to the failed Summit, I learned that consumers in Asia saves more than they spend. For Japan, being the largest economy in Asia and second in the world, its private spending in 2007 was US$2 trillion, followed by China, a miserly US$1 trillion.Compared to US$10 trillion and US$9 trillion for the US and Euro countries respectively.My, my,my the Americans and Europeans sure are big spenders!When they go broke, the whole world suffers. Asking the Chinese with their over 1.3 billion people to increase their private spending could not offset the loss in spending from the Westerners.

Looking in another way, the Asians have perfected their economy by depending on their exports.Asia became prosperous by selling to the West. The export-drive model is no longer useful. Now, Asia has to look inwards to stimulate their economy, hence the need of the Asean+3 Summit in Thailand. All countries have come out with their own stimulus packages to boost their domestic economy as stability would depend on a strong domestic market. And the Asean+3 countries need to forge for greater regional cooperation to ensure that their stimuli would succeed.

However, Asia's recovery would not succeed if Europe and the US do not put their act together courageously, to synchronise their packages to stimulate and stop the global economy from slipping into a deeper recession.