For several decades, East Asian economies have appeared to be models of predictable prosperity. First Japan, then Hong Kong and Singapore, then Taiwan and South Korea, followed by South-East Asia and China which recorded prolonged bursts of dynamic economic growth that collectively became know as the Asian economic miracle. But the 1997 Asian financial crisis shattered many of the region’s financial markets, companies and banking systems. It also destroyed East Asia’s aura of economic invincibility.

When many of the region’s economies were recovering the, US IT bubble burst in 2000-01 that popped demand for computer and electronics goods, the mainstay of many of the region’s export-oriented economies. Even Singapore and Taiwan, highly resilient economies that had hardly been touched by the earlier financial crisis, experienced their worst downturns in a quarter of a century. This ferocious buffeting of the past five years has left many of the Asia’s economies feeling somewhat groggy and disoriented, struggling to find new engines of economic growth. Some are succeeding, some are faltering, but there is now very mixed economic picture across the region.

China has become Asia’s undoubted economic start recording growth rates of above 7 per cent a year. A massive inflow of foreign direct investment — totalling about $215.9 billion between 1997 and 2001 - and a five-year programme of the government spending has kept the country’s economic flywheel spinning fast. The country has potentially huge problems with bad loans in its banking system and unfounded pension liabilities. The CLSA, the stock brokers, estimates that once this “off-balance sheet” debt is added back on the government’s books - as it should be - then China’s public debt to the GDP ratio amounts to 139 per cent - six times higher than officially stated. But so long as China can maintain its economic momentum, the CLSA argues, it stands a good chance of growing its way out of such problems.

South Korea, too, has been performing strongly. It has successfully restructured many of the giant conglomerates, or chapbook, that once dominated the economy. It has also reformed much of its banking system and stimulated domestic demand to provide a new engine of growth. The GDP this year is forecast to expand by more than 6 per cent — although Korea, like many other Asian countries, has suffered a slowdown in export growth in recent weeks.

The Japanese industry benefited from a weaker yen towards the end of the last year. That pumped a lot of profit into the big Japanese exporters, pushed the stock market higher and fuelled hopes that the country’s decade long economic stagnation might be coming to an end. But a strengthening yen has killed off this renewed optimism while the domestic economy has remained weak. The government has little room left for manoeuvre since interest rates are near zero and the public debt has climbed to 140 per cent of the GDP. The country’s economy is expected to contract by 0.4 per cent this year.

Like Japan, Hong Kong has also been suffering from price deflation and growing unemployment. The jobless rate rose to 7.7 per cent in the second quarter of this year. Some economists are even forecasting that the Hong Kong’s weakening domestic demand will push the city back into recession next year - its third in five years. Hong Kong desperately needs a boost to domestic demand, but remains constrained by its fixed exchange rate against the US dollar.

For the moment, most South East Asian economies are ticking along nicely, as the governments have increased public spending and cut interest rates to stimulate consumer demand. Singapore, Malaysia and Thailand should all produce economic growth of more than 4 per cent this year — way below their historic growth rates, but better than they have achieved for a while. However, the Philippines and Indonesia are likely to fare worse as their governments struggle to impose financial discipline and political uncertainty continues to deter the investors.