We wish our readers a happy and successful 2013. To kick off the year, we
review ten questions that we think will be important for Asian—and in
many cases global—markets this year. At the risk of oversimplifying a set
of very complex issues, these questions can be grouped under three broad
themes.
The first theme concerns the possible consequences of past stimulus
and/or emerging excesses in the economy. A particular focus for markets
here is the potential fallout from rapid credit growth in China since the
global financial crisis, and the rise of nonbank financing there.
The second theme of our questions is the conduct of monetary policy—to
what extent policymakers will attempt to “lean” against emerging signs of
credit excess (China, Indonesia and possibly elsewhere in ASEAN), against
a backdrop of unconventional easing by many developed-economy central
banks, or “clean” by supporting faster recoveries in areas with still
meaningful output gaps (Japan, possibly India).
Our third important theme for 2013 is structural economic reform. The
largest economies in the region are coming off disappointing economic
performances in 2012. With new political leadership in most of these
economies, there is a window of opportunity for policy changes that could
enhance longer-term potential growth, with potentially beneficial spillovers
in the region and globally.
Of course, some of the most important questions of the year may turn out
to be ones that we and market participants are not currently asking. Stay
tuned for an eventful 2013!