Asian crisis affects world growth<\/p>\n
LONDON (AFP): The financial turmoil in East Asia will shave
\n0.5 percent from world economic growth in 1998, with continental
\nEurope the most exposed region after Asia, U.S. investment bank
\nLehman Brothers forecast Friday.<\/p>\n
The global economy will expand by 2.5 percent next year,
\naccording to the bank.<\/p>\n
\"Apart from Asia itself, the most exposed region is
\ncontinental Europe, whose recovery is not yet fully established,\"
\nthe bank's global chief economist, John Llewellyn, said.<\/p>\n
Any slowdown in growth would be unhelpful for Europe, which is
\ngrappling with record unemployment as it gears up for the launch
\nof the common European currency in January 1999.<\/p>\n
The bank predicts that growth in Europe in 1998 will be cut by
\n0.25-0.5 percentage points to 2.25-2.5 percent.<\/p>\n
U.S. growth looks stronger in the future than Lehman Brothers
\nanticipated at the start of the Asian crisis in July, but the
\nupward revision it would have made is largely canceled out by the
\neffects of the turmoil.<\/p>\n
The United States is now expected to post growth of 2.5
\npercent in 1998. The U.S. economy grew by 3.3 percent in the
\nthird quarter of this year.<\/p>\n
Lehman Brothers said growth in Japan, whose moribund economy
\nis under pressure from domestic banking troubles and the weakness
\nof major Japanese export markets in Southeast Asia, will more
\nthan halve to one percent, from 2. 5 percent previously forecast.<\/p>\n
In Asia, excluding Japan and Australia, growth will be cut by
\nfour percentage points to 3.5 percent, the bank forecast.<\/p>\n
The financial crisis in East Asia will have the effect of
\nsmothering domestic demand in those countries, and so hit exports
\nto the region from Japan, Europe and the United States.<\/p>\n
In addition, the sharp currency devaluations in the region
\nwill boost the international competitiveness of goods produced
\nthere, to the disadvantage of major Western industrial economies.<\/p>",
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