Asian economies
By The Economist
From The Economist
Published: November 23, 2012
Some of the world’s stablest economies are Asian. Time to worry?
Nov 10th 2012 | HONG KONG | from the print edition
LAOS, a poor country of 6m people wedged between Vietnam and Thailand, has no openings to the sea and few routes to world attention. But it is now enjoying a rare moment in the sun. Last month it won approval to join the World Trade Organisation. This week it hosted the ninth Asia-Europe meeting, which brings together leaders from the world’s most and least dynamic regions. Its small economy, which exports gold, copper and hydropower, is distinguishing itself. Its growth rate is not only one of the fastest in the world but also one of the steadiest.
From 2002 to 2011 growth fluctuated within a remarkably narrow range, never falling below 6.2% and never rising above 8.7%. Only three countries have recorded a steadier growth rate (as measured by its standard deviation) over that period. Two of them are also Asian: Indonesia and Bangladesh. Growth in developing Asia is now steadier, as well as faster, than growth in the “mature” economies of the G7 (see chart 1). It was more stable in 2002-11 than over any other ten-year span since 1988-97.
The “Great Moderation” is the name given to the era of economic tranquillity that prevailed in America and elsewhere in the rich world before the financial crisis. Should the label now be applied to Asia?
Asia’s economies are better known for their speed than their stability. From 1996 to 1998, for example, growth in five big South-East Asian countries (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) swung from 7.5% to minus 8.3% as the Asian financial crisis struck. Even now some highly open economies, such as Thailand, Singapore and Taiwan, remain more volatile than the global average. Exposed to international trade flows, their industrial output fluctuates like a twirling ribbon with every twitch of demand.
But developing Asia (which excludes rich economies like Hong Kong, Singapore, South Korea and Taiwan) is dominated by populous countries that rely increasingly on domestic demand to drive their economies. Household consumption contributed half of the growth of just over 6% Indonesia enjoyed in the year to the third quarter (its eighth consecutive quarter of growth at that pace). Exports have fallen from about 35% of GDP ten years ago to less than a quarter in 2011. Developing Asia’s combined current-account surplus, which reflects its dependence on foreign demand, more than halved from 2008 to 2011 and is expected to fall further this year.
Asia’s stability also owes something to demand management. During the Asian financial crisis policymakers faced a dilemma. They could defend their exchange rates by raising interest rates. But that would cripple borrowers. Or they could let their currencies fall and ease rates. But that would inflate the burden of foreign-currency debt, crippling borrowers too.
In the aftermath of the crisis the region worked its way out of this trap. Most countries accumulated an impressive stock of hard-currency reserves and weaned themselves off foreign-bank loans in favour of foreign equity and local-currency bonds. Because these liabilities were denominated in their own currency, they did not rise in value when the currency fell.
That has freed policymakers to cut interest rates when the economy slows. Indonesia’s central bank, for example, slashed rates by three percentage points from December 2008 to August 2009. It cut rates by another point from October 2011 to February 2012. Thanks in part to its responsive central bank, Indonesia’s year-on-year growth rates over the past 20 quarters have been the most stable in the world.
Wise monetary policy was also one of the reasons cited for the Great Moderation enjoyed by the G7 economies. Another was the supposed depth and sophistication of the rich world’s financial systems, which, it was said, allowed households to smooth their spending, firms to diversify their borrowing and banks to unburden their balance-sheets. Both of these pillars of stability proved false comforts. Economists had not quite settled on an explanation for the Great Moderation before it inconveniently ceased to exist.
Worryingly, Asia’s great moderation has also been accompanied by sharply rising credit. According to Fred Neumann of HSBC, leverage is now higher than at any time since the Asian financial crisis (see chart 2). This credit expansion may represent healthy “financial deepening”, which many economists believe is a cause of growth and stability. But rising leverage can also be a threat to stability. The late Hyman Minsky, among others, argued that drops in volatility allow firms and households to borrow more of the money they invest. Stability, in Minsky’s formulation, eventually becomes destabilising. Overleverage does not require excessive optimism, merely excessive certitude; not fast growth, merely steady growth.
Fortunately, Asia’s policymakers never shared the West’s faith in self-correcting financial systems. The region has pioneered “macroprudential” regulations, designed to curb excessive credit and capital flows even without raising interest rates. In March, for example, Indonesia tightened loan-to-value ratios on mortgages and imposed minimum downpayments on car and motorbike loans.
Mr Neumann is, however, sceptical that regulatory tightening can substitute for the monetary kind. Macroprudential controls are not watertight, he notes. As long as capital remains cheap, money will leak. If the regulator lowers mortgage loan-to-value ratios, for example, banks may simply raise the appraised value of a home. If regulators impede foreign purchases of property, as Hong Kong just did, foreigners will seek inventive ways around the rules.
Hong Kong’s freedom to raise rates is constrained by its currency’s fixed link to the dollar, one of the few pegs to survive the Asian financial crisis. Other central banks do not have that excuse. Currency flexibility has given them the freedom to cut rates when growth slows. It should also allow them to raise rates when financial excess threatens—even if rates remain near zero in America, Europe and Japan. If stable growth allows lenders or borrowers to become overstretched, it can “sow the seeds of its own destruction”, Mr Neumann argues. Nothing great about that.
from the print edition | Finance and economics
亞洲「大穩定」 埋下威脅種子
2012-11-14 天下雜誌 510期 作者：經濟學人
亞洲經濟靠著金融政策、監管制度，保持穩定成長。但歌舞昇平的榮景，是不是風雨前的寧靜？
寮國，在越南和泰國之間，是人口六百萬的窮困小國。但成長率卻是全球最快、最穩定的國家之一。
○二年到一一年的十年間，寮國的經濟成長一直維持在六．二％到八．七％。這段期間，只有三個國家有如此穩定的增長。其中兩個，是同樣位於亞洲的印尼和孟加拉。
這讓人擔憂，金融海嘯前，歐美國家出現的「大穩定」（崩壞前的榮景），是否將在亞洲重演？
亞洲經濟體向來以快速成長聞名，而非穩定。
除了四小龍外，亞洲發展中國家多半仰賴內需市場提升經濟。出口佔ＧＤＰ比重，從十年前的三五％，到去年已降至不到二五％。
亞洲經濟的穩定，多少也歸功於需求管理。
九七年金融風暴時，亞洲國家面臨兩難：如果用調高利率來捍衛匯率，將不利借款人。但如果放手讓貨幣貶值，利率也下調，不但將增加外債負擔，同樣也不利借款人。
那次危機後，大部份亞洲國家都累積了可觀的外匯存底，且逐漸擺脫對外國銀行貸款的依賴，轉而青睞外國股票和本國債券。由於這些債務都以本國貨幣計價，所以，當這些貨幣貶值時，他們的債務並不會因此增加。
政府也藉調整利率來刺激經濟。
例如，過去五年，印尼經濟穩定成長，部份原因，要歸功於靈活應變的央行政策，屢次調降利率。
過去，七大工業國享有「大穩定」的原因之一，是複雜的金融制度，讓消費者看似能夠安心消費。企業也得以擁有各種借貸的名目，美化損益表。這些安穩的表象，後來證明，都是錯誤的便利。
令人擔憂的是，亞洲的大穩定，同樣地，也讓信用借貸急劇成長。
很多經濟學家相信，這是經濟穩定成長的結果。但這對經濟也可能是威脅。
已故的美國經濟學家明斯基認為，經濟波動變小，使得人們借更多錢，反而會導致不穩定。
所幸，不像西方放任金融體系發展，亞洲推出「總體監理」，用以調控過度的信用擴張。例如今年三月，印尼限縮抵押的貸款成數，並規定車貸頭期款的最低額度。
匯豐銀行的經濟學家紐曼，對嚴密監管的可行性，持懷疑態度。他認為，總體監理並非無懈可擊，只要有利可圖，熱錢就會滲入。
例如，銀行只要提高房產的估價，就可因應貸款成數的減少。或像之前，即使香港禁止外資購買物業，外資還是能遊走法律邊緣。
如果嚴格監理可以帶來穩定成長，卻使得借款者和放款者都備受箝制，紐曼認為，「這是種下自我毀滅的種子，一點都不好。」（陳竫詒譯）
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