The U.K. may have voted to exit the EU, throwing markets into in a tizzy, but Asia should come through this episode with only a few scratches. The trade exposure to the U.K. is minimal for most Asian economies. The risks to direct bank financing from U.K. financial institutions appear manageable. The impact of currency swings -- in particular a stronger yen -- are harder to judge, tightening financial conditions for emerging markets in the region.
Still, the fragility of the West, economically as well as politically, is a reminder that Asia cannot count on an export rebound any time soon to lift ailing growth. Reforms are urgently needed to put local demand growth on a more sustainable path.