Full-blown depression is not going to be limited to Asia. As in the 1930s, financial crisis and global recession are now progressing simultaneously along three parallel, interdependent tracks. The first is the contraction in production, demand and trade, and the fall in prices. This is what deflation is about - and it is not the opposite of inflation. Unlike inflation, there are no known and easy remedies, because the fall in prices is a result of increased competition in a context of over-production, excess stocks and productive capacity, as well as a reversal in business expectations.
Deflation affects raw materials first and hardest.
But it spreads through manufacturing like a disease. This process has now been at work for over a year. The sum of Asian intra and extra regional trade amounts to a third of world trade. In the 1980s steps were taken by the major capitalist powers to bring OPEC to its knees and reverse the price of oil. Liberalisation and deregulation of the oil market are at the origin of the current collapse of prices and the resulting shock - which will prove to have far more destructive effects than in 1973 and 1978.