Current state of the economy  Domestic economic activity recovered swiftly from the second quarter of last year onwards, helped by the easing of the global financial unrest and the pro-active operation of policy. For 2009, GDP growth came in at a positive rate of 0.2% year on year.
Three potential channels of contagion can be noted: first, trade links; second, financial market disturbances; and third, deleveraging by European financial institutions. Naturally, these three channels are not mutually exclusive. For instance, the longer the disturbance continues in European financial markets, the harder the hit to the balance sheets of European financial institutions, which causes European deleveraging in Asia.