Asia facing biggest test.(OPINION)

HONG KONG -- As this issue of ATI Magazine goes to press, the financial crisis is in full swing--and forecasts for the coming year are likely to be even more wayward than usual. The financial turmoil will have died down by the end of 2008, if only because official interventions and nationalisations in almost all the major, and many of the minor, economies have become so extensive that there will be little left that still has the potential to need saving.

The story for 2009 is the depth of the financial fall-out on the real economy of the world. Already, the IMF has forecast a steep decline in world growth to 3.0 per cent, but within that estimate, China is still at 9 per cent, India at 6.9 per cent and the US and Europe merely flat, so the estimates still look very rosy.

For Asia, the first question is how far domestic demand can substitute for the …