According to economists, both demographics and economics are key reasons behind the global growth shifting tide toward East Asia. Aslowdown in U.S. growth, now forecast for 2007, could also help exacerbate this shift.

“The countries with the greatest potential for FX appreciation due to sound macroeconomic fundamentals are Singapore, Malaysia, and Korea,” Callow says. “Of course, the Chinese yuan could rise substantially, but we don’t expect the authorities to allow it to do so.”

The bottom line?

“There will be a cyclical re-weighting of growth towards Asia and away from the U.S. in 2007 as the U.S. economy slows down,” Callow says.

But, for now, Goldstein feels the U.S. remains the driving force in the global economy.

“However, there clearly has been a slow change dictated by the rising importance of East Asia,” he says. “There has been a gradual shift in the center of power toward East Asia and that is only going to continue to accelerate. That is good news for the U.S. Some of the burden has been lifted from our shoulders and put on theirs.”