Roach: Asia Decouple? Don't Kid Yourself!

Read the following on Dow Jones Newswire.

• DAVOS, Switzerland (Dow Jones)--The once-popular assumption that Asian economies can "decouple" themselves from any slowdown in their Western counterparts has proven "completely wrong" amid the current financial crisis, said Stephen Roach, chairman of Asia at Morgan Stanley, on Friday.
  
  "This time a year ago at this place there was consensus that we were embracing the so-called Asian Century and no matter what happens in the developed economies, Asia would decouple from it," Roach said at the World Economic Forum.
  
  "There's no decoupling in a globalized world. Don't kid yourself," he said, adding that the global slowdown has shown that "no region is more externally dependent than Asia."
  
  While China and India are suffering from a sharp weakening in economic growth, Japan is in a "horrific" recession, Roach said.
  
  The crisis is a "wake-up call" for those subscribing to illusory optimism and poses a big challenge for Asia to shift its growth model to a less export-dependent one, he said.
  
  "While the world trade boom has already gone bust, it won't be easy for Asia to boost private consumption," Roach said.
  
  At the same time, Roach said free trade remains the way forward for global economic growth and the long-stalled Doha Round of trade talks needs to be revived as soon as possible.
  
  He added that there tends to be "cyclical economic nationalism" during an economic crisis and political leaders around the world should prevent such harmful sentiments from getting out of control.