The U.S. remains the key risk for Asia. In a perfect world a soft landing in America will be accompanied by a recovery in Japan and stronger growth in Europe. A rebalancing of growth in developed economies would reduce uncertainty in Asian and other emerging markets by eliminating fears that strong U.S.-led global growth can't last. Unfortunately, there are good reasons to fret that the American economy will drop like a brick, not like a feather. The problem is that record current-account deficits and a strong dollar don't go together.
History shows that when the U.S. dollar cracks it sinks with stomach-churning speed.
The strong dollar has fuelled healthy appetites for Asian imports and kept U.S. inflation in check. If the dollar sidesteps current-account worries, a stockmarket crash could put a leash on import demand. A U.S. stockmarket slump would also hurt Asian stockmarkets and consumer sentiment. The gyrations of American stockmarkets this month have heightened those worries. Review Publishing Company Limited, Hong Kong.