T

he exploitation of abundant shale oil has brought the US to an era of cheaper energy, less energy dependence and improved industrial competitiveness. For now, the US is no longer a consumer of the first resort for emerging markets, particularly Asian countries.

At the same time, developed markets, such as EU member countries, are growing slowly, all of which has badly impacted the Asia export-led growth model.

Seemingly, Asia has to reinvent itself.

Its business model is unlikely to work as well in the future as it has for the past decade.

Despite credit market conditions tightening, the cost of borrowing is rising, making the Asian debt-fueled style of growth more expensive.

More importantly, China has embraced a '€œnew norm'€ of slower expansion amid the slowest GDP quarterly growth since the global financial crisis in 2008 '€“ it is shifting from the export-oriented model to more domestic consumption-led growth, which has had big spillover effects for the rest of the region, with the supply-chain linkage dwindling.

In particular, Indonesia, a resource-rich country, has been dragged down by the backdrop of a slowing China, which in turn has led to lower demand for coal, nickel and coking coal.

Soft commodity prices, the widening current-account deficit and rising interest rates have concurrently driven Indonesia'€™s GDP growth down.

Not surprisingly, global growth fears hit Asian markets harder '€” blood-bathed, reminiscent of the darkest days of the global financial meltdown.

Danny Tanoto
Jakarta