and the united states has been much greater during this recovery than is typical following severe recessions. additionally, in europe, financial strains have been acute, helping to push the region back into recession. in the united states, spillovers from europe and a still - depressed housing market also help account for our tepid recovery and elevated unemployment. as i will discuss a bit later, japan has fared somewhat better, but faces significant challenges of its own. see greg howard, robert martin, and beth anne wilson ( 2011 ), “ are recoveries from banking and financial crises really so different? ” international finance discussion papers 1037 ( washington : board of governors of the federal reserve system, november ), http : / / www. federalreserve. gov / pubs / ifdp / 2011 / 1037 / ifdp1037. pdf. bis central bankers ’ speeches the role of emerging asia in contrast to the advanced economies, emerging market economies, particularly in asia, recovered sharply from the global downturn, in part by using countercyclical fiscal and monetary policies to bolster domestic demand. based on the research i referred to earlier, the recovery in the asian economies appears on pace with what we might have expected, given the severity of the previous recession. this swift recovery has not only benefited asia, but the global economy as well. lately, however, the momentum in the emerging asian economies has weakened, in part as their exports to europe and the united states have slowed. exports to china from other countries in the region have also weakened, partly because of the unwinding of china ’ s earlier stimulus programs, but also because china ’ s exports to the advanced economies have slowed, thus lowering its demand for imported parts and components. for the moment, emerging asia is offsetting weakness in external demand through accommodative monetary and fiscal policies. but ultimately, it would be desirable, both for the region and for the global economy, if emerging asia were able to rely less on temporary policy stimulus and more on a fundamental rebalancing of growth toward domestic demand. to be sure, progress toward rebalancing has already occurred, as evidenced by the substantial reduction in current account surpluses in the region since the onset of the global crisis. however, some of this adjustment likely reflects cyclical factors, and, moreover, the aggregate current account of emerging asia remains substantially in surplus. greater reliance on domestic demand would not only help shield asia ’ s economic growth from the

weakness in the advanced economies ; it would also boost the well - being of its citizens by enabling them to consume a greater share of the output they produce. moreover, transforming emerging asia into an independent engine of global growth would put the global economy on a much surer footing, thus helping to achieve the group of twenty nations ’ commitment to strong, sustainable, and balanced growth. what about japan? finally, i would like to turn to japan, whose experience combines elements of both its emerging asian neighbors and of other advanced economies. like other asian economies, japan shares a history of current account surpluses and export - dependent growth. also like other asian economies, the japanese economy bounced back faster from the global financial crisis, at least prior to its tragic earthquake and tsunami, than most advanced economies, and more robustly than in any japanese recovery since the mid - 1970s. strong exports to the rest of asia supported this rebound. however, japan has not been immune to the slowdown in trade affecting the region. japanese exports have flattened out since about the middle of 2010, contributing to a negative trade balance for the first time since 1980. like its neighbors, japan will need to look for alternative engines of growth. notwithstanding its similarities to emerging asia, the japanese economy faces fiscal and demographic challenges similar to those of other advanced economies in europe and the united states. japanese government spending helped propel the economy ’ s bounceback from recession, but it has also added to public debt, which the international monetary fund now projects will rise to 237 percent of gross domestic product ( gdp ) this year, the largest among the major advanced economies. 2 along with this high debt, aging of the population and slow gdp growth pose important concerns for fiscal sustainability. see international monetary fund ( 2012 ), “ taking stock : a progress report on fiscal adjustment ”, world economic and financial surveys, fiscal monitor, table 3 : general government debt, 2008 – 13, p. 17 ( washington : imf, october ), www. imf. org / external / pubs / ft / fm / 2012 / 02 / fmindex. htm. bis central bankers ’ speeches to date, the savings of japanese household and firms have been more than enough to finance the government deficit ; indeed, interest rates on government debt have fallen to near record lows. accordingly, japan, like the united states, has the scope to carry out fiscal consolidation plans that address long - run sustainability issues without endangering near - term growth prospects.