THE Chinese economy last week posted its slowest quarterly growth numbers since the global financial crisis, in another sign of the new reality that Asian economies are waking up to.
But grappling with China's "new normal" of growth will not be the only challenge for Asian economies that have long been reliant on the Chinese turbocharged engine of growth. There are also the imminent rate hikes by the United States' Federal Reserve and a strengthening greenback.
Besides, Japan is experiencing anaemic growth, which will not help the slowing of Asian exports.
Already, the consequences of funds flowing out and rising rates are making their impact felt with weaker Asian currencies and heftier debt repayments for firms.
Nanyang Business School's senior lecturer, Dr Siriwan Chutikamoltham, cited figures showing that about US$91 billion (S$122.5 billion) has already flowed out of China in the last quarter of 2014. When capital outflows occur and persist, there may be a decline in investments or much-needed infrastructure.
Even as these challenges are now coming to the fore, there is substantial unfinished business for Asian economies to handle. There is the need to invest in education and healthcare, as well as to modernise the banking sector. Meanwhile, economic nationalism seems to be gaining ground.
Professor Sumit Agarwal of National University of Singapore's Business School noted that "lack of roads, electricity, water and so on causes lack of confidence in the future prospects of economic growth and investment returns".
Credit Suisse vice-chairman of Asia-Pacific Lito Camacho pointed out that nationalism "has reignited some of the existing territorial conflicts".
All these could be obstacles, he told The Straits Times, "to a faster pace of economic integration in the region".
Mr Camacho is participating in one of the panel discussions at the World Economic Forum's (WEF) East Asia forum taking place in Jakarta from April 19 to 21.
His point is borne out by the WEF's latest Global Risks report, which lists factors such as interstate conflict and failure of national governance among the top 10 risks. The report said these risks could cause significant negative impact for several countries or industries within the next 10 years.
These risk factors could see countries using economic tools, such as trade treaties or cross-border investments, to establish relative geopolitical power, for example, it noted.
Yet, despite these issues, there remains an air of optimism about Asia among business leaders and observers, driven by reforms in some Asian economies, the trend towards urbanisation, and other factors.
Mr Samuel Tsien, group chief executive of OCBC Bank, which has operations in Asia, including China, Hong Kong and Indonesia, told The Straits Times that South-east Asia will remain resilient.
"Lower oil prices have boosted domestic demand... while allowing for restructuring in fiscal spending in countries such as Indonesia that will contribute positively in the long term," he said.
Last week, Indonesia posted a better-than-expected trade surplus, which means that there will be less pressure on the current-account deficit, given the weak rupiah.
Many are pinning their hopes on the Asean Economic Community (AEC), with its promise of boosting trade and fund flows among its members.
Mr Tsien, while noting that there are development gaps between countries and that the lowering of cross-border restrictions is still a work in progress, said that the AEC "should deepen economic cooperation".
Nanyang Business School's Dr Siriwan said that the success of the community "will bring in more foreign domestic investment to the region, to benefit from the abolishment of trade barriers and a larger market size".
There are other reasons for the optimism. In Indonesia, the new government's reform policy is inspiring consumer and investor confidence. In India, Prime Minister Narendra Modi's moves to reform bureaucracy and liberalise the insurance industry have sent positive signals.
Investors should not ignore the various growth drivers, said Mr Camacho of Credit Suisse.
He noted: "First, Asia's domestic consumption is growing at an unprecedented rate fuelled by decades of economic prosperity. This provides a self-propelled economic engine for many of the economies.
"Second, urbanisation will continue not only in China but also in India and South-east Asia. This creates demand across many sectors. Third, Asia still has massive infrastructure needs in the next decade."
But the region needs to "do a better job of communication with the international investor community", Mr Camacho stressed.
He concluded: "Perspective is what is being lost in the discussion. Asia is still the most compelling region in the world that is expected to grow faster than most."