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I was somewhat remiss in not wishing our Asian readers a Happy Lunar New Year – for what will be the year of the tiger. I have lived the New Year in so many ways being based in Vietnam at the moment and after a few days of celebrations and peering into the future I am no wiser as to whether the year of the tiger will be good, bad or indifferent.
That is somewhat relatively unimportant as probably the more significant point is the rate of growth of the so called ‘Tiger Economies’. It was a term used to classify a small number of fast track economies many moons ago but now is a loosely used term to label Asian economies generally that are on an upward spiral.
And the ‘tiger cometh’. As I listened to the news of the Greece bail out and heard recent Japanese GDP figures I contemplated how the world dynamics are fast changing. Recent Japanese GDP figures released ensured it was still the number two world economy – but only by a whisker. And so it really is academic whether you use the western ‘GDP Method’ or the emerging economies growth rate method to measure the impact of individual countries on the global economy.
Whether China is number two now or not matters little as its power in the global context is now almost beyond its GDP quantum. Note the tightening of their reserve ratios and the flutter it’s caused on Wall St. China like so many Asian economies is a net saver whilst the west are net spenders – but of Asian goods!!
I travelled numerous times to Japan on BHP steel business in the 70’s and I contemplated then ‘what if Japan became the number one economic super power?’ as I witnessed the fierce growth in the 60s, 70s and 80s. In the 50s and early 60s the catch cry was don’t buy Japanese as it is rubbish. Their quality was to later set new global standards. But what has gone wrong. Is the Toyota recall the tip of the iceberg? What is it telling us?
In my last few days of contemplation the creative accounting that Greece has employed in calculating their debt levels reminded me of the creative techniques used by companies that face the brink. China does not have to use creative accounting to rate its standing in the world stage. When a company or country employs doubtful accounting then there is only one direction. And what other countries are to follow?
Political power goes hand in hand with economic power. Can the USA hold onto its number one position as the political and economic super power? Many pundits would have it that it is only a matter of time before Chian is number one.
Is it a case of innovate or perish or is it just too late for the USA?
Enjoy the ride
Tom Scollon
Chief Analyst
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