The report notes that recovery is being fueled not by speculative investments or short-term foreign borrowing, but by recovery of consumption and exports - benefiting from a buoyant external market - underpinned by continued strong local savings rates. It also notes the impressiveness of the East Asian recovery in comparison with the "lost decade" suffered by Latin America after their crises in the mid-1980s, and states that the region's rapid rebound attests to the resiliency and traditional strengths of the East Asian economies high savings rates; a competitive manufacturing sector; an embrace of open trade opportunities, especially within the region; and flexible labor markets.

Kawai cautioned, however, that, "today's recovery is at the rebound stage as countries restore previously attained income levels. To achieve lasting growth," he said, "governments have to maintain their focus on dealing with the challenges of public and private debt overhang; attracting and keeping foreign and domestic investment; fighting corruption and improving public institutions; and addressing lingering insecurity of poor and near-poor households."

The report notes that, although the risks to recovery have lessened since the beginning of the year, they continue to emanate from slow or imperfect policy initiatives and from an always-possible global or regional downturn. In addition, the region, burdened with a crisis legacy of heavy debt, skittish investors, and household insecurity, is dependent on the "virtuous cycle" that growth has unleashed. Explains Kawai, "If demand should suddenly collapse, companies that can now pay their debt and are beginning to invest could quickly go under. Governments that depend on rebounding revenues to service debt might suddenly have to cut back on social or other important spending. Investors--domestic and foreign--who have emerged from the crisis much more fleet-footed might exit. Finally, the poor and near-poor, having seen their incomes fall already, may be less patient with governments that ask them to sacrifice yet more. For these reasons," he concludes, "maintaining the pace of growth well into the future is not only desirable it is essential."

Kawai continued, "the good news is that the East Asian countries can at last return to the medium term development agenda. The World Bank - through lending and policy advice, assistance with capacity building, and working with our partners to increase development effectiveness - remains committed to helping the countries of East Asia meet these challenges, strengthen the gains of recovery, and to secure a safer future for East Asia."