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The only danger was that growth would be so strong that inflation would start rising and interest rates would have to rise. Well, that was the forecast. We now know that they got it horribly wrong. Asia is in financial meltdown, threatening the economies of the major industrialised nations including Australia.
So how bad will it be and what are the implications for investors? At one extreme some forecasters in the United States and elsewhere are predicting an episode of deflation. This 'D' word has not been used since the 1930s depression and would represent a period where prices fell continually over a broad range of goods and services.
These forecasters point to two factors that might cause deflation to occur. One is the rapid industrialisation of third world countries that is causing an oversupply of many goods ranging from computers to pharmaceuticals. This overproduction will cause a price war in developed countries and see the prices of many goods fall.
The second is of course the Asian meltdown, which will make many of these countries super competitive in many areas and again prices will fall. If deflation did occur it would turn normal investment strategies on their head.
Property for example would be a bad investment. Falling prices would cause either larger levels of unemployment, falling wages or both as companies struggled to compete. This would reduce the ability and the willingness of people to buy and rent property.
The attractiveness of the share market would be mixed. Companies that could maintain prices or extract big productivity gains might remain profitable and give investors a reasonable return. But others, who found the competition difficult would perform badly.
Cash would be king in such a scenario. Simply putting a stash under the bed would see its purchasing power rise as prices fell.
US Federal Reserve chairman Alan Greenspan has recently talked about the possibility of deflation but dismissed it as unlikely. Australian economic forecasters, Access Economics, agrees. Access says that while the price of some goods may fall, the cost of services will continue to rise so the overall price level would probably continue to increase, although slowly.
The consensus forecast for this year from Australian economists, for what that is worth, is that the Australian economy will continue to pick up steam despite the Asian crisis, although it will not be as robust as it would have been.
The negative impact of Asia will be offset by rising domestic demand and strong growth in Europe and the United States. If so and as long as interest rates stay down, the property and share markets should perform reasonably well.
But like last year, there is always the possibility of a wild card. The biggest danger is a contagion effect from Asia spreading to other countries such as Japan, Taiwan and China.
The Year of the Tiger should be an interesting one.
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