Asia Remains Vulnerable to Uncertainty in Advanced Economies

It is not easy to keep an orderly house in an unsettled neighborhood. That’s the major hurdle facing Asian economies as the advanced world deals with unusual economic, financial, institutional and political fluidity. Judging from China’s gross domestic product data released this week, Asia is in a relatively favorable position to navigate the challenges. But the battle is far from won.

In more normal times, Asia only needed to ask two major economic questions about the advanced countries: How strong a locomotive would these nations provide for trade? And to what extent would they supply relatively stable capital flows, a coherent interest rate structure and limited volatility for the dollar, euro and yen, the world’s three principal reserve currencies?