Daffodil International University
Faculty of Science and Information Technology => Environmental Science and Disaster Management => Topic started by: nmoon on February 25, 2013, 12:29:02 PM
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With the exception of Japan, the rest of Asia came through the 2008 financial crisis with relatively little damage. But for the second time in less than four years, the region now faces another major external demand shock, which could turn a mild recession into something far worse.
Can Asia Overcome Its Vulnerability To The European Crisis? : Stephen Roach
Will Asia Find Shelter From The Storm?
Photo Credit: Jonathan Kos-Read
NEW HAVEN – Asian authorities were understandably smug in the aftermath of the financial crisis of 2008-2009. Growth in the region slowed sharply, as might be expected of export-led economies confronted with the sharpest collapse in global trade since the 1930’s. But, with the notable exception of Japan, which suffered its deepest recession of the modern era, Asia came through an extraordinarily tough period in excellent shape.
That was then. For the second time in less than four years, Asia is being hit with a major external demand shock. This time it is from Europe, where a raging sovereign-debt crisis threatens to turn a mild recession into something far worse: a possible Greek exit from the euro, which could trigger contagion across the eurozone. This is a big deal for Asia.
Financial and trade linkages make Asia highly vulnerable to Europe’s malaise. Owing to the former, the risks to Asia from a European banking crisis cannot be taken lightly. Lacking well-developed capital markets as an alternative source of credit, bank-funding channels are especially vital in Asia.
Indeed, the Asian Development Bank estimates that European banks fund about 9 percent of total domestic credit in developing Asia – three times the share of financing provided by banks based in the United States. The role of European banks is especially significant in Singapore and Hong Kong – the region’s two major financial centres. That means that Asia is far more exposed to an offshore banking crisis today than it was in the aftermath of Lehman Brothers’ collapse in 2008, which led to a near-meltdown of the US banking system.
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We all have to believe that nothing is impossible in this modern age of Science.
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may be possible