The Economic Advisor

The EU and Asia

I remember reading as an undergrad that artificial countries will never work out. Good examples are the former Yugoslavia and Czechoslovakia. We can never integrate people and their spaces together with other people and their spaces if they are different culturally. We need very strong leaders to hold such constructs together.

In recent times, we saw problems in China with Tibet and Indonesia with Timor. Now, the problem which is more glaring is the EU. The EU is different in that it is made up of different countries. These countries have given up their own currencies to embrace a common currency. This, effectively, surrenders some of the individual countries’ control over their economic destinies. This is probably a reason why Baroness Margaret Thatcher, then Prime Minister, refused to have the UK join the EU.

In The Straits Times on 29 April, I read with concern as an article reported that there is little danger to Asia because of our little trade exposure to the EU. It said that the EU consumes 19.8% of China’s exports, 12.4% of Korea’s, 11.9% of Japan’s, 11.9% of Thailand’s, 10.3% of Taiwan’s and just 4.9% of Singapore’s. These numbers are based on a 12 month average ending March.

What should be considered, in my opinion, is the missing multiplier effect. If China loses 19.8% of her export market in any substantial way, we can imagine them importing less from other countries and this will impact other countries’ trade figures in total. Same goes for Japan, Korea and also Singapore. The fallout will have earth moving consequences for us in Asia.

Unfortunately, there is no end in sight to the EU’s problems, it would seem.

I’m just another person trying for a secure financial future in an uncertain world. Creating a stream of reliable passive income is a primary objective for me.
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