by Sudesh Samuel

Created on: March 19, 2009   Last Updated: September 20, 2009

Diversity remains key to the abiding fascination of Asia through 2009. A land with a myriad of peoples, cultures and languages, Asia is the largest continent in the world and the most populated. In steering recovery from the global economic crisis, interdependence with other continents will be crucial, yet it is the intra-dependent relationships between Asian countries that have the greatest bearing on the stability of the region.

A significant hurdle for the region's major economies is a continued dependence on exports to developed countries coupled with a shortage of domestic demand.

China's economy is projected to grow by 8% in 2009 whilst maintaining it's role as the biggest holder of United States debt yet despite a steady increase in investment, China's consumption rate has consistently fallen from 55% of total gross domestic product in the 1980's to 35% last year. Even should incomes increase, the lack of government-sponsored networks for healthcare, housing, retirement and social welfare means that the more the Chinese earn, the more they will feel they have to save. This situation is not unique to China and echoes around the region as Asian economies try to convert their populations of savers into spenders to support local industries in light of collapsed foreign demand. With cultural predispositions and without appropriate investments in social safety nets, the task is an uphill one.

External shocks along with short-term strategic initiatives by individual Asian countries are likely to occur throughout 2009 and will require scenario planning and prudent management.

The single crucial issue, the resolution of which would invariably facilitate global economic recovery, hinges on the restoration of stability to the crippled banking sectors of the United States and Europe. Asian banks have held steady thus far, yet all it takes is a slew of bad loans connected to the economic meltdown that, if not well managed, may easily propagate the domino effect throughout Asia and slow regional recovery.

Recovery may be further hit by the growing debt situation in Eastern Europe. With growth built largely on borrowed foreign capital, countries like Hungary and Poland are finding themselves deep in debt with previously generous inflows of funds drying up and reversing direction. Based on Eastern European borrowings amounting to some US$1.7 trillion, a figure equivalent to a third of the region's gross domestic product or roughly US$400 billion must be repaid

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