East Asia's emerging economies have come roaring back since the 1997 financial crisis. They have recouped losses caused by that trauma, but regional governments now face new challenges that require still more creative policies and deeper reform. In fact, the difficulties will intensify as China continues its breakneck growth. There is no room for complacency or congratulations, no matter how much deserved.
The emerging economies of East Asia are richer and have a bigger share of the world economy than they had in 1997, when financial contagion -- "baht-ulism" -- spread from Thailand to shake much of the region. Growth in those countries hit 8.1 percent last year. While that is not as high as the super-charged pre-crisis rate, the World Bank notes in its six-monthly regional economic outlook that economic output in dollar terms has doubled; the poverty rate -- people who live on less than $2 a day -- has dropped from 50 percent to 29 percent; and the region has accumulated more than $2 trillion in foreign exchange reserves since the crash. At current growth rates, less than 25 million of East Asia's 2 billion citizens will live below the poverty line by 2020.
The World Bank estimates that 90 percent of Asians will live in middle-class countries within three years. While that is a remarkable accomplishment, it forces regional governments to deal with new problems that will be as vexing as those they have already tackled. The World Bank warns of a "middle income trap," in which countries' progress is halted and they cannot proceed further up the income ladder.