ASEAN economies expected to expand 4%-4.5% in 2003
ASEAN economies expected to expand 4%-4.5% in 2003
Dow Jones, Manila
Southeast Asian economies are expected to sustain last year's growth momentum in 2003 despite a sluggish performance in the second quarter due to the outbreak of SARS.
"We forecast that economic growth would be maintained at an average rate between 4.0 percent-4.5 percent this year," according to the draft of a communique that finance ministers from the Association of Southeast Asian Nations, or ASEAN, will issue Thursday.
ASEAN finance ministers are in Manila Wednesday for the start of their two-day annual meeting to discuss economic and financial developments in the region. The ASEAN ministers expect the efforts of individual governments to mitigate the impact on economies in the region from SARS.
"Our fiscal stimulation through government spending and tax relief, and accommodating monetary policy should, however, enable our economies to regain the lost ground during the latter half of this year," the draft communique said.
It said efforts to establish free-trade arrangements between ASEAN members and China and Japan should also improve prospects for the region this year.
Southeast Asian economies expanded 4.4 percent overall in 2002, up from 3 percent in 2001, led by robust private consumption and investment, and through exports in some countries and fiscal spending in others.
While growth was sustained in the first quarter of the year the outbreak of SARS likely slowed the pace.
"Fiscal policy was, and will continue to be, expansionary this year to sustain the recent revival in domestic demand and to make up for the loss of economic activities caused by the outbreak of SARS during the second quarter of this year, while keeping on track our fiscal consolidation target in the medium term," the draft communique said.
The draft raised concerns over the slower pace of restructuring in the financial and corporate sectors last year, and the consequent impact on financial intermediation in the region's banking system.
It noted the rise in new nonperforming loans that has constrained bank lending and delayed the restoration of a strong financial system.
As part of efforts to boost growth in the region, ASEAN ministers will push for the establishment of more bilateral currency swap agreements, and the creation of a regional and Asian bond market.
A total of 12 bilateral swap agreements worth a combined $31.5 billion have so far been signed; the last was in February between Japan and Indonesia.
Four more swap arrangements are being negotiated between China and the Philippines, China and Indonesia, Korea and Indonesia, and Japan and Singapore.