Effect of economic stimulus on ASEAN economies

Tim Johnson writes in the Washington Post:

Stimulus packages being put in place by many export-dependent nations in Southeast Asia may not do enough to protect those economies from the consequences of the fundamental shift in trading patterns that underlies the current financial crisis, analysts warn.

The exporting nations have taken slightly different paths in attempting to combat the global slowdown, but all their packages rest on a similar assumption: that the world economy will pick up in the third quarter, causing things to return to normal.

Regional analysts say, however, that the present crisis is not just another cyclical downturn but is instead a structural realignment and that Southeast Asia's export economies need to act quickly to adjust to a new reality in which American and European consumers will no longer be the main market.

Nobody can say if any shift is fundamental or not at this point. I don't think this kind of speculation is helpful. Countries should prepare themselves either way.

We have another report on the threat of the economic downturn poses to economies that have pursued export-led growth. Walden Bello writes in the Asia Times:

The sudden end of the export era is going to have some ugly consequences. In the past three decades, rapid growth reduced the number of people living below the poverty line in many countries. In practically all countries, however, income and wealth inequality increased. But the expansion of consumer purchasing power took much of the edge off social conflicts. Now, with the era of growth coming to an end, increasing poverty amid great inequalities will be a combustible combination.

The future is uncertain. In any case, ASEAN countries are not about to create new domestic markets overnight. In the meantime, it seems to me that ASEAN countries would do well to invest heavily in their own human resources and urban transportation infrastructure.