another factor contributing to exorbitant demand was the regulation of the financial system, which practically rewarded risk - taking. the other, just as significant reason is economic policy pursued by several asian countries which was based on relatively cheap exports and low currency exchange rates. broad - based and sustainable domestic demand was and is too little valued in economies based on cheap labour force, goods exports and related investment. therefore, it can be assumed that private consumption and domestic demand were below par in eastern asia. the result was large current account surpluses and accumulating foreign reserves that were lent to the rich usa. it was impossible for such an economic model to be stable and by now, as i already mentioned, the situation has thoroughly changed. gdp in leading industrial countries will decrease 3. 8 % this year with growth in the usa contracting by 2. 8 %. for the rest of the world this means the usa foreign trade deficit will reduce notably, which, in the imf's estimate, will lead to shrinkage in the usa imports. therefore, global economic growth will not be able to lean on the us domestic demand and exports of goods and services to the states either this or the next year. the recession in the usa has hit hard exports - dependent east - asian countries, where goods exports have declined by more than a third year - on - year. therefore, smaller and more open asian countries have suffered a very sharp downturn. for instance, singapore is expected to undergo a 10 % and taiwan a 7. 5 % contraction. larger eastern - asian countries, such as china, maintain their economic growth by launching foreign assets accumulated over the past ten years and reducing interest rates. national expenditure on infrastructure has been markedly boosted and it is also hoped cheap bank loans will help keep up consumption. the imf forecasts asian new industrial countries'economic growth will be – 5. 6 % in 2009 and 0. 8 % in 2010. in conclusion, the current crisis has thoroughly changed the past ten year's development scenario of the global economy. the end of the current growth model is characterised, at least in short term, by catastrophic contraction in trade in the whole world. at the same time it has to be borne in mind that in the case of free market economy, a temporary fall is always replaced by a rise. all major crises are almost always caused by national policies, which affect people's expectations and decisions made on the ground of these expectations. when trying to make up for previous

well placed to absorb both positive and negative shocks during the last 15 years. deregulation and reform in preparation of the eu membership has allowed us to fully integrate our economic and financial systems with the single market. however, that kind of approach requires, in today's conjuncture, forward - looking structural reforms in almost all eu member states, e. g. in the product, services and labour markets, healthcare and social insurance systems etc. for estonia the adoption of the euro is the only logical step and the overarching policy priority. in this context, we would like to emphasize that it is in the interest of the whole european union that the euro area enlargement takes place in accordance with the clear set of well known rules while the criteria are applied, in line with the treaty provisions, on an equal and economically meaningful manner. the countries joining should have a proven track record to fare well under the common monetary policy. this being the case, the euro area membership would fasten the catch - up process in these countries and strengthen the countries'ownership in the eu - wide macroeconomic co - operation at large. macroeconomic stability and economic flexibility are prerequisites for the new member states to ensure that investment in physical and human capital is sustained and outlays for research and development further increased. higher growth and stronger policy coordination on the eu level will also strengthen the social dimension of enlargement.