For example, in a low-growth economy that is in the process of deleveraging, social stress tends to intensify and is more likely to result in a rise in protectionism and excessive government intervention. When lending to nonviable firms continues for political or social reasons, the resultant decline in productivity growth will lower growth potential. Furthermore, monetary policy can also distort economic incentives.
Indeed, countries in this region have exhibited impressive resilience in restoring their economic vitality. When the world economy slowed in the wake of the bursting of the IT bubble in 2002-03, Asia's solid growth helped avert the global recession. China's economic expansion is particularly remarkable as it has sustained an average growth of 8-9 percent per annum for the past decade.