Growth in East Asia, including that ofthe crisis-affected countries has strengthenedprogressively-despite the magnitude of the shocksexperienced during the financial crisis and their effects onthe balance sheets of financial institutions and corporates.Progress on financial and corporate restructuring hascontributed to the consolidation of growth. Indeed.Countries that have made the most progress on corporate andfinancial sector restructuring, notably Korea andMalaysia-have experienced the strongest growth performancesince the crisis. However, growth has not been sufficient toredress the problems in the balance sheets of financial andcorporate sectors. Although progress has been made inreducing vulnerabilities, especially in the banking sector,progress on corporate restructuring has been slower and moreuneven across countries. In most countries, debt-to-equityratios remain high relative to international norms andcontinue to pose a threat in the event of a major shock. Asustained effort is needed to complete the corporate andfinancial sector restructuring agenda, especially since thecases that remain are the more difficult ones. Such effortsare important not only to further potential vulnerability inthe kind of uncertain global economic environment we arewitnessing, but also to position East Asia forproductivity-led growth that must be the basis for sustainedimprovements in income over the longer-term.
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