OECD sees bleak year for crisis-hit Asia<\/p>\n
SINGAPORE (Agencies): The OECD said on Wednesday it saw a
\nbleak year for crisis-hit Asia with recessions in Indonesia and
\nThailand, and other roaring Tiger economies of the recent past
\nreduced to a crawl.<\/p>\n
But it said prospects for the region could improve in 1999 as
\nlong as governments saw through tough reforms.<\/p>\n
The economy of Indonesia, savaged by a maelstrom of crisis
\nwhich threatens to explode into social unrest, will contract by a
\nhuge 8.5 percent this year, the Organization for Economic Co-
\noperation and Development (OECD) said in its latest twice-yearly
\noutlook.<\/p>\n
Thailand, the first domino to topple in Southeast Asia last
\nyear, was likely to see its economy shrink by 1.5 percent this
\nyear after a 0.4 percent contraction in 1997, said the OECD,
\nwhich groups 29 of the world's most advanced economies.<\/p>\n
Malaysia, which grew by a typical 7.8 percent last year, was
\nlooking at expansion of a mere 1.4 percent this year, while the
\nPhilippines would inch along at only 1.8 percent growth against
\n5.1 percent last year, the report said.<\/p>\n
Hong Kong, the epitome of the open economy favored by modern
\nmarkets, is expected to grow by a marginal 0.9 percent compared
\nto 5.2 percent in 1997, the year Britain handed its former colony
\nback to China.<\/p>\n
Singapore, widely praised for its efficient economic
\nmanagement, is seen growing by 3.2 percent compared to 7.5
\npercent last year, the kind of expansion the city state has been
\nused to for much of the last two decades.<\/p>\n
Only Taiwan, with forecast growth of 5.9 percent, and China,
\nat 7.2 percent, will maintain anything like consistent expansion,
\nthe report said.<\/p>\n
The OECD saw prospects for the region in 1999 as considerably
\nhealthier, with Indonesia turning the corner into growth of two
\npercent and Thailand's economy growing by 4.5 percent.<\/p>\n
The report said Malaysia would start clawing its way back with
\n3.5 percent growth, while the Philippines should accelerate its
\nexpansion to four percent, Singapore to 5.2 percent and Hong Kong
\nto 3.8 percent.<\/p>\n
China would grow by 7.5 percent and Taiwan by 6.2 percent next
\nyear, it said.<\/p>\n
\"The repercussions of the financial turmoil on the economies
\nof the region will continue for some time further,\" it said.<\/p>\n
Most countries were doing that, the OECD said, offering
\nparticular praise for Thailand, where \"prompt and vigorous policy
\nactions\" had contained the crisis.<\/p>\n
But the report sounded a more skeptical note over commitment
\nto reform in Indonesia, which is nearing completion of its third
\nagreement with the International Monetary Fund on conditions for
\na $43 billion rescue package.<\/p>\n
\"Rigorous implementation of the financial and structural
\nreforms is essential, both to prevent the crisis from re-emerging
\nand to allow an eventual return to sustainable growth,\" it said.<\/p>\n
The report blamed structural weaknesses for the crisis, which
\nhas obliged the IMF to put together rescue packages worth more
\nthan $100 billion for Indonesia, Thailand and South Korea.<\/p>\n
But it said regional governments were not entirely to blame.
\nSo were Western banks, which some critics in Asia allege are
\nbeing baled out from IMF packages.<\/p>\n
\"Legitimate questions exist as to whether the Asia crisis
\ncould have become so severe if lenders had been behaving with a
\nprudent respect,\" it said.<\/p>",
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"sponsor": "Okusi Associates",
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