In economic and financial circles, the mere mention of Asia these days typically conjures up images of booming growth, surging consumer spending, rapidly modernising cities and buzzing entrepreneurial energy. However, the reality is that beyond the sensational growth stories of China and India, many other parts of the continent are struggling to regain lost glory and are under-performing their global peers. The most obvious case of disappointment is Japan.

While it’s popular to associate China’s rise with a decline in US economic power, America’s share in the global economy has remained stable this decade at just under 30 per cent. Japan’s share, on the other hand, has fallen to less than 10 per cent from more than 15 per cent a decade ago. In statistical terms, China is barely making up for Japan’s decline in the growth league tables, with Japanese growth averaging a measly 1 per cent this decade compared with the global average of 3.5 per cent over the same period. The fundamental reasons for the Japanese decline are all too familiar — poor demographics, stagnant wages, anaemic consumer spending and dismal policy responses (compounded by a closed corporate culture and banking system).

But while investors are getting increasingly accustomed to the notion of a secular decline in Japan’s economic might, it is the relative underperformance of Asia’s many developing countries that’s truly surprising them. Outside of China, growth in East Asia has averaged 5 per cent over the past three years, which is well below the global emerging-market average of 6.5 per cent and a distant cry from the 8 to 9 per cent growth rates that were commonplace in many of these countries before the Asian financial crisis in 1997-98. From South Korea to Thailand, domestic demand in much of the region has been rather moribund during the current global expansion.

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