Asia has come through the global crisis of 2008-09 with flying colours. As chairman of Morgan Stanley's Asia businesses over the past three years, I have been privileged to witness this extraordinary resilience first-hand. As I now head back to the US, three lessons stand out.
First, Asia learnt the painful lessons of the 1997-98 regional crisis very well. That crisis stemmed largely from Asia's vulnerability to the vicissitudes of international capital flows. Lacking in foreign exchange reserves, overly exposed to short-term external debt and with rigid currency pegs, the region stood little chance when the hot money started to flee. When Thailand went, Indonesia, South Korea, Taiwan and most of the others in developing Asia were quick to follow.
By contrast, for Asia, the latest crisis was primarily an external demand shock. The unprecedented 11.8 per cent drop in the volume of global trade in goods in 2009 hit this export-led region extremely hard. No country was spared either sharp recession (Japan, Taiwan, Malaysia and Thailand) or major slowdown (China, India and South Korea). But Asia's build-up of foreign exchange reserves in the period between the two crises – from less than US$1,000bn in 1998 to nearly $5,000bn in 2009 – insulated it from the financial upheaval that followed Lehman's collapse.