2 The Global Backdrop The world economy is entering another period of turbulence and uncertainty following two years of tentative recovery. It now seems clear that the US-led response of easing monetary policy following the 2008/09 financial crisis bought only temporary respite.
The extensive monetary easing masked the structural imbalances in the world economy and allowed “business as usual” to continue. Asian economies continued to depend heavily on exports, particularly to the developed, western economies.
In the meantime, the US and EU governments recorded huge increases in sovereign debt as they eased monetary policy:
The capacity of the US and Eurozone governments to fund further growth are now severely limited:
The Asian growth model of exporting to richer, wealthier western nations is now no longer sustainable. Those economies face slow growth as they unwind their massive debt burdens. Asian nations must now look towards home and promising emerging markets for growth. ________ World Bank chief warns of more woes. Sun 15 Aug 2011.
[Pakatan Rakyat Budget 2012 released by Datuk Seri Anwar Ibrahim on behalf of PR in Kuala Lumpur on 4th October 2011. Part 3 of 10]
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