Analyst sees shadow over Asian economies
Analyst sees shadow over Asian economies
BANDAR SERI BEGAWAN (Reuters): High oil prices, political
upheaval and sliding global electronics prices will drag down
Asian economic growth next year, a senior Goldman Sachs official
said on Tuesday.
Kenneth Courtis, vice-chairman Asia for the U.S. investment
bank, said some Asian nations might have to pay a high cost for
not undertaking bold economic reforms as their economies slowed
down in the months ahead.
"The problem is after the first quarter, things will slow down
very quickly. The first reason is that energy prices have gone up
and that is already starting to have a knock-down effect," said
Courtis, who was speaking on the sidelines of a meeting of chief
executives from the Asia-Pacific region.
"Oil is a huge factor as terms of trade have dramatically
turned against Asia," he said, adding that the Philippines, South
Korea and Taiwan would be hit the hardest.
An imminent slowdown in the U.S. economy and declining global
prices of computer chips would also cast a shadow over Asian
economies next year, he said.
"All of that is coming to hit Asia. So we are going to see
growth come down pretty substantially in the next quarters."
Goldman Sachs forecasts growth in the Asia's newly
industrialized economies (NIEs) will slowdown to 5.4 percent in
2000 from 7.4 this year.
Southeast Asian economies are expected to grow 4.0 percent
next year against 4.8 percent in 2000, it said.
The Asia-Pacific Economic Cooperation forum forecast this
weekend that regional gross domestic product would grow 3.5
percent in 2001, against 4.3 percent in the current year.
Courtis said many Asian economies had squandered the benefits
of strong growth by not undertaking bold financial reforms.
"I have been saying all along that we should be using this
window of growth which was driven by the huge rebound by growth
in the global economy," he said.
"As the economies slowdown in the next few months, we will see
many of the unaddressed problems coming right back to the
surface," he added.
Investors say high banking debts in Thailand, a maze of cross-
corporate governance in Korea, stalled privatization in the
Philippines are examples of a lack of reform efforts in Asia.
Courtis said weak borrowers in the region would find
themselves in trouble as interest rate spreads widened.
"We already see that happening in Korea. You see problems in
the banking system coming to the surface in Taiwan, Thailand and
elsewhere," he said.
Meanwhile, central bankers from the world's major economies
said late on Monday the impact of lofty oil prices has so far
been modest, and that they expect prices to abate in early 2001
after the northern hemisphere winter.
Bank of England Governor Eddie George, summing up a meeting of
central bankers from the Group of 10, said the group expected an
oil price drop once winter fuel demand wanes.
The bankers gathered in the Mexican capital for a regular
meeting of the Bank of International Settlements (BIS).
"The conclusion we reached today ... was that at the current
level of oil prices, the impact on the world economy as a whole
was more likely to be "fairly modest," George told reporters.
He added that this impact would likely be modest both on
inflation and economic activity in the world's major economies.