In the relatively near future probably some major central banks will begin gradually moving away from near-zero interest rates. The question here is whether the emerging market countries of Asia – and, indeed, of the world – are sufficiently prepared for these decisions, to the extent that potential capital flows and market adjustments can take place without major macroeconomic consequences.
While we continue to scrutinize incoming data, and no final decisions have been made, we have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market (and other) central bankers have, for some time, been telling the Fed to “just do it.” Further ahead lies the answer to the question of whether developments in the global economy will permit the continuation of the export-centered growth strategy that underlies the Asian miracle or whether we will later conclude that this period, the period after the Great Recession and the global financial crisis, marked the beginning of a new phase in the economic history of the modern global economy.