Southeast Asia bouncing back in recovery<\/p>\n
SINGAPORE (AFP): Key Southeast Asian economies are expected to
\nbounce back with strong growth rates in 1999 in a stunning
\nexport-led recovery from recession, regional experts say.<\/p>\n
The resurgence is fueled also by higher fiscal spending and
\ndomestic consumption as well as lower interest rates and weaker
\ncurrencies.<\/p>\n
Excepting Indonesia, which could languish in negative growth,
\nmajor Southeast Asian nations should end 1999 with gross domestic
\nproduct (GDP) growth rates ranging from 2.9 percent to 6.3
\npercent, say economists from three foreign banks and an
\ninvestment house polled by AFP.<\/p>\n
They are Standard Chartered, Societe Generale and ABN-AMRO
\nbanks and Vickers Ballas investment house.<\/p>\n
They forecast Singapore's GDP growth at 5.0 to 6.3 percent,
\nMalaysia at 3.0 to 5.6 percent, Thailand at 4.0 to 4.7 percent,
\nthe Philippines at 2.9 to 3.4 percent and Indonesia at minus 'n
\nto minus 0.1 percent.<\/p>\n
It was a rapid climb-back for the region from mostly negative
\ngrowth in 1998, a year after the region plunged into its worst
\nrecession in decades due to a financial crisis which erupted in
\nmid-1997.<\/p>\n
The crisis had pushed GDP growth last year to 0.3 percent in
\nSingapore, minus 7.6 percent in Malaysia, minus 10 percent in
\nThailand, minus 0.5 in the Philippines and minus 13.2 percent in
\nIndonesia.<\/p>\n
Eddie Lee, regional economist with Vickers Ballas, said the
\nSoutheast Asian recovery was stunning because of two key reasons
\n-- it defied text book theory and rode on export growth fuelled
\nlargely by Asia.<\/p>\n
"It was a rare 'V' shaped swift bounce-back for Southeast Asia
\nrather than the traditional 'U' shaped recovery, where economies
\nshould hit the bottom and hover around there for sometime before
\npicking up," Lee said.<\/p>\n
He said studies showed Asia itself absorbed the bulk of
\nSoutheast Asian exports and played a key role in the recovery.<\/p>\n
Citing figures in the second quarter of 1999, he said, for
\nexample, the United States contributed "nothing" to Singapore's
\nexport growth, which largely came from Japan and other Asian
\nnations.<\/p>\n
In Malaysia's case, Japan and the rest of Asia contributed 47
\npercent to export growth while the United States accounted for a
\nlower 30 percent.<\/p>\n
Philip Wee, treasury economist with Standard Chartered bank,
\nsaid Southeast Asia had experienced the "first phase of recovery
\nwhich was very much export-led, underpinned by global electronics
\ndemand, and backed by increased fiscal spending by governments.<\/p>\n
"The challenge now is to broaden growth and stimulate domestic
\ndemand as an important objective," he said.<\/p>\n
ABN-AMRO said with the exception of Indonesia and Thailand,
\nprivate consumption growth in the region reverted to positive
\nterritory in the second quarter. But recent figures suggest even
\na turnaround in Thailand.<\/p>\n
"Reflecting the recovery in domestic demand and increased
\nexports, import growth is rebounding strongly across the region,"
\nit said.<\/p>\n
ABN-AMRO regional economist Mangal Goswami said the region's
\nlargely high savings rate cushioned the recovery from a very low
\nbase.<\/p>\n
"The growth numbers have really been a surprise on the upside
\n-- with the distinct 'V' shaped recovery driven by strong
\ninventory cycles and firmer domestic demand," he said.<\/p>\n
Lee of Vickers Ballas said Southeast Asia, once the fastest
\ngrowing region in the world, would regain its pre-crisis brisk
\nlevel growth rates by 2000.<\/p>\n
Standard Chartered, ABN-AMRO and Vickers Ballas forecast
\nIndonesia's GDP growth to contract by one percent or less in
\n1999 as expansion had resumed there only from the second quarter
\nand off a very low base.<\/p>\n
Societe Generale said Indonesia's GDP rate for the fiscal year
\nto March 2000 would turn positive at 2.5 percent growth.<\/p>",
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