Trading out of crisis: Is it different this time?

The Asian financial crisis of 1997-1998 originated in Asia but as other parts of the world, especially the developed economies, readily absorbed increasing quantities of goods and services from Asia, the region managed to “export its way out of crisis”. In contrast, the global economic crisis of 2008-2009 originated in the most developed economies and spread quickly to the rest of the world causing significant declines in global production, employment, trade and living standards. At the peak of the crisis, concerns were expressed about the fate of Asian economies “addicted” to export-led growth. Obviously, with the rapid disintegration of traditional export markets, it was not deemed possible to strategize an easy exit from the crisis based on exports or trade in general. However, by as early as the middle of 2010, monthly exports and imports for most Asian economies were either back to their pre-crisis levels or approximating those levels, while their GDP growth rates were approaching the rates unique to Asia prior to the crisis, and financial flows looked more stable than in the months before the crisis. From Asian perspective, it certainly looks as exports again might pull their economies out of crisis. But were exports the only, or the most important driver of recovery, or were there other pull factors as well? And more importantly, what should be the role of exports in building more stable but dynamic growth in the future?

Related Subject(s): International Trade and Finance