Économie et Statistique n° 438-440 - Aspects of the crisis
Has Emerging Asia Driven the Global Recovery?
The stabilization of the advanced economies since Q2 2009 marks the end of a recession of unprecedented magnitude. This stabilization coincided with a rebound in the emerging countries, particularly in Asia, where domestic demand has been very buoyant. To what extent has the recovery in emerging Asia benefited the advanced economies, and how has it contributed to stabilizing their activity? The increase in a country's domestic demand, as observed in emerging Asia, impacts its direct trade partners via an increase in their activity and exports. But this “direct” effect is compounded by an “echo” effect, as economic expansion in partner countries boosts their domestic demand. Thus, the recovery spreads to the direct partners' own trade partners via increase in their activity and exports, and so on. The “echoes” generated by the recovery in emerging Asia must be taken into account when estimating an order of magnitude of the latter's contribution to the rebound in the advanced economies in Q2-Q3 2009. We find that the echo effects of the recovery in emerging Asia indeed contributed significantly to the advanced economies' performance at the exit from the crisis. In France, the growth stimulus from emerging Asia averaged an estimated 0.35 points in Q2-Q3 2009. Direct knock-on effects alone boosted French growth by 0.1 points during the period, the rest being due to indirect effects. Japan and, to a lesser extent, the United States and Germany appear to have reaped greater benefits from the Asian stimulus. By contrast, we estimate that Spain and the United Kingdom were slightly less driven by Asian domestic demand. On balance, the upturn in Asian demand helped the advanced countries pull out of recession in mid-2009. In a longer-term perspective, we should examine whether Asian demand could become a growth engine for the advanced economies or whether the stimulus is merely a one-time phenomenon, notably attributable to the recovery plans enacted in emerging Asia.