Operational restructuring has not always accompanied debt restructuring, and some restructured loans are becoming non-performing once again. There has been over-reliance on rescheduling of debt rather than of repayment of principal, corporate mergers or closures. Governments have to encourage further mergers and foreign direct investment, and make progress in corporate governance including upgrading of accounting, auditing and disclosure standards. Third, fiscal balances are coming under strain, in part because of unresolved debt and asset disposal problems. This is partly due to massive state involvement in restructuring the financial systems affected by the crisis.
Deficits limit scope for boosting domestic demand as export demand eases.
Fourth, private investment still languishes because of excess production capacity, banking sector difficulties, debt overhangs and depressed equity markets. Foreign direct investment has been slow to return. Fifth, there is the state of the US economy. US manufacturing activity, consumption spending and retail sales are slowing down more quickly than expected. This will hit Asia's exports.