What Would Happen When Exports Dwindle?

China’s exponential growth has been fuelled by its exports.

Despite massive debts, Japan has kept strong trade surpluses to backstop its domestic debt.

Korea has seemingly recovered from the 1997 financial crisis due to its strong export machine.

The reality is that the U.S. economy which has been a prime market for the world’s exports is weakening. Asian export countries have been shifting their exports to European and emerging markets. Yet the economy of the Europe is also in a deflationary spiral. Emerging markets haven’t substantially grown their purchasing power yet.

Where would export-driven economies go? Boosting domestic consumption doesn’t seem to be a viable option for the foreseeable future.

One thing seems to be clear: rising buying power based not on savings and rising income would be detrimental to any economy.