I have long believed that it is misleading to speak of ‘Asia’ as if it were one cohesive entity. Asia is a diverse region spanning more than two billion people with vastly different levels of economic development, political systems, histories and cultures. These differences are increasingly evident in how the region’s economies are faring in the Great Recession – a theme I elaborate in more detail in the latest edition of Business Monitor International (BMI)’s monthly Global Macro Monitor publication.

As the first half of 2009 draws to a close, it is clearly evident that while most Asian economies are suffering, not all of them have entered recession, and some will continue to grow, albeit at a much slower pace than before. Below is a chart of BMI’s real GDP growth forecasts for Asian states in 2009:

Real GDP Performance In 2009 (% change)

Overall, I identify three distinct ‘Asias’ in 2009. These are:

• China and India (‘Chindia’). The two will remain the fastest-growing economies in the region, partly because they are slowing from a faster base than the others. China will benefit from its massive fiscal resources, while India will be sustained by private demand and agriculture.

• Trade-dependent exporter states. These are clearly the worst-hit economies, with Singapore likely to be the poorest performer in 2009 (-7.2%) by Business Monitor’s GDP forecasts. The collapse of external trade is the key reason. Gross exports to GDP exceed 60% in most of these states. However, most of these countries have the fiscal resources to tackle the slowdown.

• Domestic consumer-driven states. These countries are basically Indonesia, the Philippines, Bangladesh and Sri Lanka, where private consumption is more than 65% of GDP. However, private consumption is still vulnerable to weaker exports and slowing remittances from overseas workers. See the table below for a regional comparison.

Private Consumption (% of GDP)

Admittedly, there is some overlap between the above categories (Vietnam has elements of category 2 and 3), but I feel that they are still fair. Having said that, I caution against direct comparisons between different Asian countries’ GDP performances. This is because differing levels of national development, experiences, and expectations mean that the impact of the recession on citizens will be highly uneven.

For example, Singapore, Japan, Hong Kong, and Taiwan will be the worst-hit in terms of GDP contraction. But all are wealthy states with the resources to prop-up their economies and mitigate social unrest. Elsewhere, while China will still grow robustly by international standards, its 5.0%+ growth rates represent a shocking deceleration from 13% at the peak of the current growth cycle. Moreover, with expansion in 2009 set to be below the 8.0% generally considered necessary to maintain social stability, and considering that China’s entire model seems comparable to a bicycle – i.e. stable at high speed, but vulnerable to toppling over at slow speed – the Chinese government is clearly more worried than most about the current recession, despite its vast resources.