Financial liberalisation was a gradual process, however, so that the lifting of controls could take place in tandem with the restructuring of the economy and thus avoid the potentially destabilising effects of abrupt and sharp reversals of international capital flows. This strategy proved wise; in the 1990s many Asian economies, which had not given sufficient consideration to sequencing, were exposed to severe financial crises.
Through most of last year's slowdown, in contrast to the usual pattern, the household sector was a major stabilizing force. As a consequence, although household spending should continue to trend up, the potential for significant acceleration in activity in this sector is more limited. In fact, there are a number of pluses and minuses in the outlook for household spending.