East Asia 'upbeat' on growth


The ADB projects 7 percent growth for China

Staff and wires

YANGON, Myanmar -- The Asian Development Bank (ADB) says East Asian economies should post "relatively healthy" growth of 5.2 percent this year, with a recovering world economy spurring the region's exports.

ADB President Tadao Chino told Southeast Asian finance ministers gathered in Yangon that the region, already battered by the 1997-98 Asian economic crisis, was starting to emerge from the "second slowest overall growth in decades" seen last year.

"East Asia seems to be moving from last year's sharp synchronized slowdown to a faster-than-expected but a moderate rebound," Chino said. "Indeed the rebound in the region's economy may perhaps be already under way."

East Asia, in the ADB's definition, includes China, South Korea and the 10 member countries of the Association of Southeast Asian Nations (ASEAN).

In 2001, East Asia posted gross domestic product (GDP) growth of 4.3 percent compared to a healthy 7.6 growth in 2000, according to the ADB.

The ADB has projected GDP growth this year of seven percent for China, 4.5-4,7 percent for South Korea and 3.0-3.5 percent for ASEAN, said Yoshihiro Iwazaki, director general of the bank's South Asia Department.

The impacts from the September 11 attacks seemed to be less disruptive than initially thought, Chino said, adding that the American economy was recovering faster than earlier anticipated.

The ADB's 2002 growth forecast for the region was revised up half a percentage point in the last three months as the U.S. economy bottomed sooner than expected.

Confident

Southeast Asian finance ministers echoed the ADB's comments, saying on Saturday they were confident the region would achieve stronger economic growth this year based on projected recovery of the world economy.

In a joint statement after a two-day meeting in Yangon, ASEAN ministers forecast 3.5-4.0 real GDP growth for their region this year, which they also attributed to sound macro-economic policies, structural reforms and closer inter-ASEAN cooperation.

They said the global slowdown, worsened by the September 11 attacks, had caused growth in ASEAN to slow to 2.8 percent in 2001, but the U.S outlook had since improved.

"Although the outlook for the Japanese economy remains uncertain, there are signs of a turnaround in the U.S. and some European economies in the first quarter," it said.

"The signs point towards gradual recovery in the global economy with increased momentum in the second half of 2002."

That would boost ASEAN's exporters, and domestic demand would also strengthen because of fiscal expansion and higher incomes.

'Rather upbeat'

"The general message is that every one of us is rather upbeat. Although a couple of months ago it was a rather different psychology, now I think we are seeing that things are looking up," Indonesia's Finance Minister Boediono told Reuters news agency.

Last year's downturn led to a big export slump, particularly hitting hi-tech producers such as Singapore and Japan, and ministers said the focus was now on boosting domestic demand.

They said ASEAN -- Thailand, the Philippines, Cambodia, Laos, Myanmar, Vietnam, Singapore, Malaysia, Indonesia and Brunei -- had made significant progress in financial and business reforms and in dealing with bad loans left over from Asia's 1997 crisis.

But ministers warned there were many risks for the diverse ASEAN economies, especially for commodities, if the "El Nino" weather phenomenon that brought drought in 1998 hit again.

El Nino

"The concern that some of us felt was if we see the El Nino effect this year, it could affect production and even food security in some of our countries," Singapore second Finance Minister Lim Hng Kiang told a news conference after the meeting.

Lim said ASEAN countries should not allow burgeoning government spending aimed at boosting economies after last year's downturn to lead to high long-term debt obligations.

The ministers said they would work to improve their fiscal strength through better revenue collection and expenditure management. Indonesia, Malaysia, Thailand, the Philippines and Myanmar all aimed for balanced budgets in three to five years.

They also committed to further liberalizing their financial sectors, signing a protocol to this effect on Saturday and announcing a third round of negotiations to be concluded in 2004.

The ASEAN statement said members were pleased with progress on bilateral currency swap agreements aimed at providing rapid help if a currency comes under speculative attack as in 1997.