As said earlier, Japan and other Asian countries will suffer. See the chart (IHT 21 Nov 08) about faltering Japanese exports. Again, I refer to what happened in 2001-2002, in other words – way more to go down as this recession is much worse than that one.

For China, exports have been too important. It is said exports counted at one point for 50% of GDP and would be now at 40%. Not sure that is correct, looks a bit too high for me. But that half of the Foreign Exchange reserves are from the trade surplus makes sense. Switching from an export oriented economy to a consumption-driven society won’t be easy. According to Standard Chartered, 35% of demand in 2007 was generated by the government, not households. But if one considers personal income is growing at 15% per year and China tries to improve the social security network – convincing consumers to save less – there is room for increased consumption. If GDP growth does not fall well below 8%. In the meantime, who cares if it is the government spending?