With scant demand for loans, banks invested their depositors' money in stocks, fuelling a rally that helped take pressure off debtors by raising the value of their assets. Meanwhile, heavy demand for Asian exports, especially electronics, kept money flowing in. Even Indonesia is emerging from recession, though only just, with a new Government lending the kind of stability that could lure back foreign investment. With exports playing such an important role, however, much depends on what happens outside the region. Others say Japan's feeble recovery depends too heavily on government spending, posing another threat to Asian exports.
Exports are only a stopgap, however.
Ultimately, economists say, South-East Asia will need to rely on its own consumers to drive growth. While households have survived the crisis in much better shape than companies, and private spending appears to be reviving, consumers will be reluctant to spend more until they are more confident that their lot has improved. Standing in the way, investors and economists say, is the mire of bad debts preventing Asia's banks from lending to growing companies. Borrowers have the money but withhold payment to squeeze a deal from their bankers. Weak bankruptcy laws and old-boy networks shelter big, politically powerful debtors.