Information Related to "The Global Economy's Uncertain Future"
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What lessons should we learn from Asia's economic difficulties?
by Howard Davis
Japan, so long an economic superstar on the world stage, appears to be entering its first recession in a quarter-century. Some analysts are predicting a worst-case scenario of a 1930s-style Japanese deflationary depression. International experts believe the economic turmoil that began with financial collapse in Southeast Asia last summer may be beginning to affect economies all over the world.
Since the crisis started, business leaders have begun to change their
tune. Through borderless flows of money and trade aided by favorable government policies,
business leaders for the last decade had assumed an ever-expanding prosperity would
bless those who participated in the rising tide of worldwide business activity. Unfortunately,
something else is happening.
Bubbles do burst!
Once proclaimed the engine of growth for the 21st century, East Asian economic might is falling apart. Deflation seems to be rearing its head in some areas.
While Japan is experiencing even sharper price declines for manufactured goods, global commodity prices for wheat, corn, metals and gold have had dramatic drops, and gasoline prices in the United States have recently been at their lowest in years (adjusted for inflation). In February, computer prices dropped 6.6 percent-the greatest monthly plunge in history.
Premier technology companies that have driven much of American economic growth in the 1990s are feeling the pinch of a flood of cheap Asian imports while the export market to Asia is evaporating. The Asian crisis has meant at least $6.5 billion less revenue to the semiconductor industry alone this year, according to industry experts.
In a confusion of cross currents, stock prices for high-technology giants like Intel, Motorola, Microsoft and Hewlett Packard have taken heavy hits while other stock prices continue to reach stratospheric levels on the New York Stock Exchange.
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