One factor that indicates growth could continue to be high in these countries is that intra-regional trade has increased in Asia and the continent is therefore less exposed to negative direct and indirect trade effects from countries outside Asia. This is illustrated in Figures 4 and 5, which show how exports from China and India have developed per trading partner. Figure 4 Chinese exports Percentage of total Chinese exports, ASEAN includes India  Source: National Bureau of Statistics of China  2  This applies to the value of exports in nominal terms. 3  The Riksbank’s company interviews, September 2011  BIS central bankers’ speeches  5  Figure 5 Indian exports Percentage of total Indian exports, ASEAN includes China  Source: Ministry of Commerce and Industry, India  As the figures show, an increasing proportion of China’s and India’s exports are going to countries in the rest of Asia and exports to the United States have declined in importance. China and India are thus somewhat less sensitive than previously to weaker demand in the European Union and the United States. However, it is clear that the European Union is still the most important export market for these countries, which means that weak economic development in Europe will have significant consequences for growth prospects in China and India too.
Now - although there are some encouaging signs - frankly no-one can know the answer to that question with any great confidence - we are not blessed with perfect foresight! As the IMF says in one of its documents prepared for the recent meetings: “Striking the right balance for monetary policy in this environment is a difficult challenge.” Well you can say that again! It is hardly surprising against this background that there should be disagreement within the Monetary Policy Committee as to whether or not a marginal further tightening of monetary policy is necessary-in fact I would normally expect there to be disagreement when we are close to where we need to be. But we are all unambiguously clear about where we need to get to in terms of inflation, and it is unrealistic in the circumstances - indeed in any circumstances - to expect us to say what will happen to interest rates in the future. Mr. Chairman, the overall prospect for the world economy - and indeed our own domestic economy - is for continuing growth with low inflation, and we do I think have a clear vision of where we want to go and the policies to take us there. But there are certainly a number of immediately painful blackspots - internationally and here at home - and there are some formidable rocks and potential whitewater further ahead. Navigating through them will not be easy. I only hope that our snail is able to swim. BIS Review 36/1998