My mainstream media colleagues are at it again - making the scariest headlines possible out of unfavourable news. (I've done a fair bit of that myself over the decades, so I know what fun it can be.)
The latest "disaster" is the International Monetary Fund downgrading its forecast for global economic growth, "warning the global economy will deliver the weakest performance in five years" (http://business.smh.com.au/imf-delivers-grim-forecast/20080130-1oyt.html).
Well, yes, that's true - but the past five years have seen an incredible run of above-trend global growth that probably wasn't sustainable anyway. Merely recording less than the outstanding performance of those five years can still mean the world is doing very nicely.
And it is. The IMF has trimmed its forecast from 4.4 per cent growth to 4.1 per cent. The larger figure is nicer than the smaller one, but anything over four still means the world is doing pretty well and therefore our globalised Australian economy also is in good shape.
But that doesn't make a headline as attention-grabbing as "IMF DOOM AND GLOOM".
The IMF does warn, quite reasonably, about the still-unfolding credit crisis - it's a long way from over. Yet the reason why we can still thrive with the US slowing or falling into a recession can be found in the decoupling of the Asian and Middle Eastern economies from the US.
I've mentioned this before, but the American-centric commentators keep labouring the out-dated "American-sneezes-and-the-world-catches-a-cold" cliche and the world's stock markets have been reacting as if they believe them.
The case against that line was explained by the Economist magazine with its usual elegance last week. (http://www.economist.com/finance/displaystory.cfm?story_id=10567609 ) Financial markets have not decoupled, but the Asian growth engine has.
As the Economist shows, Asia certainly feels the US slowdown, but its internal growth is such that it can absorb the impact without much damage. The growth in China's exports to the US has dropped from 20 per cent in late 2006 to just one per cent, but exports only account for about eight per cent of China's GDP and just two per cent of India's.
Furthermore, even the Asian economies that are quite heavily reliant on exporting to the US are growing despite the slowdown. The magazine quotes the examples of Malaysia and Singapore which have already seen sharp falls in US exports, but have still managed overall export growth.
A recession in America certainly doesn't mean a recession in Australia. The US started this century with a recession, but we didn't feel a thing. Asia did in 2001, but it is now much more globalised and has stronger domestic growth.
The major fundamental for Australian investors - the health of our economy - still hasn't changed, despite the scary headlines.