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When economic historians look back at the current global recession, they may well remember it as a most unusual crisis.
While many questions still remain over the reasons that we got here, one thing seems clear - Asia is leading us out of the woods and back into positive territory.
How did this come to be? Global action and a rising China are two obvious reasons, but a big part of it also has to do with Asia learning its lessons from 1997.
At the turn of the year, the outlook was bleak. In January, Singapore's exports had plunged a record 35 per cent, leading a collapse in exports around the region.
Fourth-quarter gross domestic product (GDP) contracted 16.4 per cent, making it one of the deepest in history here.
Markets plummeted as stocks were sold for pennies on the dollar and some global companies teetered on the brink of collapse.
In those dark days, world leaders and their economic advisers dismissed notions of a quick V-shaped rebound and warned of painful U-shaped (delayed recovery) and even L-shaped (no recovery) growth paths.
But what was supposed to be the worst and longest recession since the Great Depression has seen Asian economies returning to growth again within a year.
During the Asian financial crisis in 1997, Singapore's recession lasted four quarters. But this time the rebound has been swift. Singapore's second-quarter GDP jumped 20.7 per cent from the first. Hong Kong's second-quarter GDP rose 3.3 per cent and Japan's edged up 0.9 per cent. Elsewhere in Europe, Germany and France have declared themselves out of a recession, and the United States is expected to emerge from it in the third quarter.
One reason economists give for this surprise turnaround is a government response which was both remarkable in its size and coordination across nations. Back in November, together with countries in the West, Asian governments slashed interest rates aggressively to boost liquidity and lending.
Rates in the region are at an average of about 2 per cent right now. During the Great Depression, interest rates were actually raised in the early phases of the crisis.
Later on, fiscal stimulus packages totalling trillions of dollars were used to jolt the economies back to life, led by China's massive four trillion yuan (S$846 billion) package, making up 6 per cent of its GDP.
In Singapore, the $20.5 billion recession stimulus amounted to 8.6 per cent of GDP. Prudence during the boom years on the part of Asian governments gave them extra 'bullets' to fire during this crisis. This has worked to minimise layoffs and boost overall spending.
The other big difference from the Asian financial crisis is that the centre of the storm this time was in the US, not here. Once the fears caused by Lehman Brothers' collapse dissipated with decisive government intervention, what Asia was essentially left with was a conventional trade shock not unlike the dot.com bubble bust.
Another factor that has led to Asia leading the global recovery has been the relative health of Asian businesses and households.
In the aftermath of the 1997 crisis, Asian corporates greatly reduced their leverage. Citigroup economist Kit Wei Zheng says this helped to reduce the risk of bankruptcy and keep retrenchments to a minimum when this crisis struck.
Asian banks also had relatively healthy balance sheets, and this meant their governments did not have to divert spending to support failing financial systems, leaving more resources to cushion their economies from the fall in exports.
Turning the focus to individuals, it was also clear that most Asian households are generally not leveraged and are sitting on a healthy amount of savings, unlike many of their counterparts in the West.
In Singapore, household assets are still seven times liabilities and are only about 3 per cent down from their 2007 peak, notes Mr Kit.
A final reason for Asia's quick rebound is that regional dependence on economic behemoth China has grown. And even in this crisis, China's growth is still above 8 per cent.
To illustrate this increasing dependence, DBS economist Irvin Seah points out that part of Asia's export collapse was due to factors in China rather than purely the credit crisis in the US and Europe.
The surge in exports leading up to the Olympics in Beijing before the crisis and then later the fall in commodity prices served to exacerbate the weakness in export numbers in the following quarters.
But in the same way, the huge spending by the government in China means it is able to lead the export recovery. In fact, Mr Seah writes that, including re-exports of Singapore-originated goods from Hong Kong to China, it will become Singapore's top export destination this year, overtaking the US.
Yet, while Asia is leading the recovery, the road itself will be bumpy with lots of ups and downs.
And it would be wise to take heed of the warnings of overheating the economy in the short term.
One interesting observation which has surfaced is that a lack of understanding of the crisis may have led to an overreaction from consumers and companies.
The fear, panic and risk aversion that ensued in the months following the crash led companies to more aggressively and ruthlessly cut costs and reduce spending.
So just as there was perhaps some overshooting on the way down, there could well be some overshooting now on the way up.
Economic consultant Centennial Asia Advisors' chief executive Manu Bhaskaran warns that the success of government policy has come with costs which have not been properly understood. These include higher public debt to GDP ratios, potential inflation surges and asset bubbles being re-inflated.
CIMB-GK chief economist Song Seng Wun points out that in Singapore, the current exuberance in the property market is a case in point.
In the longer term still, as growth is rebalanced to Asia, policies will need to work towards boosting domestic consumption.
With the traditional consumption markets of the US and Europe expected to grow at a slower pace and consume much less due to the continued deleveraging process, Asia needs its own consumers to make up for the fall in exports to the West by turning their own spending up a few notches.
If not, all the good work done during this recovery will count for naught.
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