Emerging market economies see profits amid continued global financial turmoil

Indonesia provides arguably the starkest contrast. Fitch's upgrade of Indonesia's sovereign rating on Dec. 15 restored it to investment grade status for the first time in 14 years. Back in 1997, when the Asian financial crisis exploded, the International Monetary Fund (IMF) had to step in with a three-year loan worth US$10.1 billion at the time.

“Indonesia's banking sector was not prepared to withstand the financial turmoil that swept Southeast Asia,” the IMF said then.

Fast-forward to 2011, and it is European banks that are the focus of concern as the eurozone struggles to come up with a politically palatable way to solve its own debt crisis.

All three of the world's major ratings agencies have warned that European countries face downgrades if they cannot stem the crisis. Fitch said Dec. 16 that a comprehensive solution was “technically and politically beyond reach.”

Sentiment toward Europe has turned so dark that the most positive thing Northern Trust economists could say about the outlook there was, “Our base case is that the eurozone does not completely collapse within the next two years.”

Why the Role Reversal?

Indonesia's 2012 growth is expected to reach 6.4 percent, according to a Reuters poll of economists, down only slightly from 2011's estimated 6.5 percent. The eurozone is widely expected to be stuck in recession next year, while U.S. growth will probably trudge along at one-third of Indonesia's pace.

The lesson that Asia learned from its financial crisis in the late 1990s was, “make sure you've got good insurance.”

Asia now holds most of the world's foreign exchange reserves, with about US$4.5 trillion concentrated in China and Japan combined. But there are also large stockpiles in India, Indonesia and South Korea.

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