Tuesday, February 23, 2010

Asia’s Boom Conceals Some Darker Prospects

Taiwan grew at an 18 percent annualized rate in the fourth quarter. Japan is about to have its biggest initial public offering in more than a decade. A big Hong Kong property developer quickly sold hundreds of apartments in a remote suburb over the weekend after bringing in thousands of potential buyers with free buses from the city’s center.

It is beginning to sound a lot like 2006 in Asia. Or is it?

Asia’s booming developing powerhouses are clearly beating Europe and the United States in the recovery and proving to be a pocket of great hope for the global economy.

But a look at Asia beyond the headlines shows the region still faces significant economic challenges, ranging from deflation in anemic Japan to an over-reliance on exports in places like Taiwan. China is the region’s only strong pillar, but economists warn of headwinds there, too, notably a possible real estate bubble.

As Asia’s role in the global economy expands, the threats facing the Asian economy grow in importance as well.

“Basically, we are bullish on the region,” said Robert Subbaraman, chief economist for Asia outside Japan at Nomura in Hong Kong. “But there are a lot of risks out there.”

To read more: http://www.nytimes.com/2010/02/23/business/global/23asiaecon.html?pagewanted=1&nl=todaysheadlines&emc=a6

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