Opinion & Analysis
OPINION: The trouble with pinning your colours to the mast is that if the wind changes, they can get wrapped around the rigging.
There was a hint of such entanglement on Monday at Hong Kong's cavernous waterside convention centre, where 2300 delegates and invited media had assembled for the annual Asian Financial Forum, whose theme this year was "Asia: Powering World Growth".
While strictly speaking true - the so-called emerging economies of Asia are expected jointly to produce around 6.2 per cent growth this year - the reality is that the steam is coming out of Asia in 2014, relative to the robust growth in the region which offset the developed world's financial system crisis after 2008.
Speaker after speaker at the AFF, backed by a string of New Year commentary coming from credit rating agencies and other economic forecasters, suggested the pendulum was swinging strongly back to the developed economies, and the United States in particular.
That's partly because the US Federal Reserve is starting to ease back on its money-printing programme, which has been primarily responsible for flooding global financial markets with cheap money that underpinned much of the recent Asian growth.
Since outgoing Fed chairman Ben Bernanke's announcements before Christmas of a start to long-awaited "tapering" in the US$80 billion-a-month (NZ$96b) bond-buying programme, investors have been pulling funds out of Asia and turning back to the US.
Still the world's largest economy, the US is emerging from a particularly savage bout of creative destruction; the rebound is based on cheap labour and housing, and is being helped along by cheap energy provided from a shale gas revolution.
Anecdotal evidence is growing of manufacturers shifting operations out of Asia and back to the US.
Meanwhile, in the powerhouse Asian economy of China, structural economic reform initiatives announced by newly installed president Xi Jinping will slow growth in the short term. This didn't seem well appreciated at the AFF conference.
While electronic voting from the floor of the conference confirmed a sharp swing to favouring investment opportunities in the US and Western Europe, many appeared to be toeing the line when it came to expected impacts of Chinese economic reform.
Some 39 per cent nominated China's structural reforms as the engine for Chinese economic growth in 2014, even as 29 per cent said the threat of an economic hard landing for China would be the second biggest threat to global growth this year.
The biggest threat, at 32 per cent, was the impact of US tapering on world growth.
However, expecting structural reform to deliver short-term growth is like expecting plants to grow without water. Xi's reforms are a deliberate attempt to slow unsustainably high Chinese growth rates and create a more solid platform for the future. His timing is good if the consensus is right and other big economies like the US start to grow faster.
And while Eurozone economies are hardly going to boom, with growth unlikely to top 2 per cent this year, it's fair to say the panicky talk of two years ago, when an unravelling of the single European currency appeared possible, has all but disappeared.
In our part of the world, testosterone-laden talk of New Zealand's "rock star" economy - at least in the mind of one Australian economist for Hong Kong Shanghai Banking Corporation - creates an interesting conundrum.
Our closest neighbour, Australia, is on the receiving end of the Asian slowdown, with a weak outlook for its hard commodity exports, while New Zealand's mix of soft commodities looks likely to keep steaming along as consumers in Asian economies continue to seek products made with our food and fibre.
That's pushing the New Zealand dollar closer and closer to parity with the Australian dollar, with potentially dire consequences for exporters of high-value products.
As a result, it's a fair bet that a fly on the wall at the Reserve Bank of New Zealand would have seen a fair bit of infuriated forehead-slapping the day the rock star comment was published, since it helps underpin an already over-valued New Zealand dollar.
That said, this year certainly does look strong for New Zealand, fuelled by the one-off impact of the Christchurch rebuild - in effect, a catch-up from the blow the 2010 and 2011 quakes dealt to the domestic economy.
Economists are starting to talk 4 per cent-plus growth this year. Leading indicators at current levels have historically delivered annual growth as high as 6 per cent. That would be similar to growth rates for the developing economies of Asia (if not as sustainable), although it would also push interest rates higher than expected.
Many New Zealanders face higher interest rates on their mortgage this year, with little prospect of compensating wage growth. Most of them are not directly exposed to the dairy sector or the Christchurch rebuild, so the economic recovery will be something they read about more than they experience.
For a Government seeking re-election at the end of the year, it's tempting to exploit the rock star line, but if it looks like not much more than cheerleading to too many, that line will play equally well to the Opposition's tune. BusinessDesk
Pattrick Smellie attended the Asian Financial Forum as a guest of the Hong Kong Economic and Trade Office.