SINGAPORE - The prospect of quantitative easing tapering off has forced many Asian countries to recognise their weaknesses, but despite these weaknesses, Prime Minister Lee Hsien Loong believes that the world - especially this region - is in better shape than it was before the 1997 Asian financial crisis.
He noted that banks are now more capitalised, and have kept their non-performing loans at below 3 per cent. Their external balances are also generally stronger, though countries like India, Indonesia and Thailand have slipped into deficits.
A smaller chunk of debt is now denominated in foreign currency, with external debt half of what it was, and reserves are much higher, he said.
Add to this the fact that exchange rates are more flexible and firewalls have been put in place.
Mr Lee was speaking at the opening of the Singapore Summit, a three-day gathering of officials and analysts from think tanks.
At the event at Shangri-la hotel, he said the influx of cheap money had glossed over Asian countries' weaknesses, such as excessive dependence on capital inflows, flagging current account positions and infrastructure and shortcomings in governance.
But as the possibility of the money tap closing looked more real, the leaders in Malaysia faced up to the need for their government to beef up their fiscal and macro position.
Over in Indonesia, there was acknowledgement that development hurdles had to be cleared, while the Indian government realised it needed to be more open.
Mr Lee said, however, that these were largely challenges specific to those countries, and that deeper issues were at work, shaping the future of all Asian economies.
He identified these as issues of demographics, generational change, economic and social transformation and peace and security.
How countries in the region - Singapore included - deal with them will determine how well they do over the long term.
On balance, he said, he was confident about Asia's future.