Is there really a decorrelation between Asia on the one hand and the United States and Europe on the other?

- "It can reasonably be imagined that Asia will experience high growth (due to technological catch-up, internal migration, the capacity for increasing indebtedness, rising education levels, demand for durable goods, etc.), while the United States and Europe will have only moderate growth (due to deleveraging, deindustrialisation, the distortion of income sharing to the detriment of wage-earners, wealth loss, the need to reduce fiscal deficits at a time when household savings are increasing, and in Europe low productivity gains)."
- "However, the sluggishness of growth in the United States and Europe will affect Asia. We seek to ascertain whether Asian growth will be greatly reduced by the economic problems of the United States and Europe, or whether Asia, thanks to its domestic market, can become decorrelated from the United States and Europe. In 2008, Asia's renewed correlation to the situation of the OECD countries took place via finance and bank credit. At present, we note that, even though Asia's exports to the United States and Europe account for 50% of Asian exports (taken as a whole, excluding intraregional trade), the elasticity of Asia's GDP to exports is only 0.09, while it is 0.54 in relation to domestic demand: Asia is very largely decorrelated from the United States and Europe."

Natixis Flash Economics 448 20100910