ASEAN poised for sharpest growth since crisis

ASEAN poised for sharpest growth since crisis

Martin Abbugao, Agence France-Presse, Singapore

Southeast Asia's economies are poised to grow by nearly six percent this year, their sharpest growth since the 1997-1998 Asian financial crisis, the region's finance ministers said at their annual meeting on Wednesday.

The ministers painted a buoyant picture of the region's growth prospects after seven years of major setbacks that began with the financial crisis and included terrorist attacks and the outbreaks of Severe Acute Respiratory Syndrome and bird flu.

"We expect our region to continue its growth momentum in 2004 with a projected GDP (gross domestic product) growth of 5.5 to 5.9 percent," the ministers said in a joint statement at the end of their one-day summit.

"Growth is expected to be broad-based, with both domestic and external demand providing the impetus for expansion."

Singapore Deputy Prime Minister Lee Hsien Loong, in a keynote address to the one-day summit, said the economies of most Association of Southeast Asian Nations (ASEAN) members had recovered strongly from the continued setbacks.

"ASEAN has taken quite a few hard punches in the last few years. Although we might have been bruised, we are far from being knocked out," said Lee, who is also Singapore's finance minister and prime minister in waiting.

"Now, most ASEAN economies are on the mend. Economic growth has been strong in many countries. Exports are growing and stock markets are up... ASEAN is now back on its feet and up and running again."

If achieved, the 5.9 percent growth will be the best performance for the ASEAN grouping since the financial crisis and should bolster confidence in the region amid increasing competition from giant neighbors China and India.

ASEAN GDP grew 7.3 percent in 1996, slowing down to 4.14 percent in 1997. It contracted a whopping 7.14 percent in 1998 as the full impact of the crisis was felt before recovering to expand at 3.58 percent in 1998.

GDP expanded 5.85 percent in 2000, and slowed down to 3.19 percent the following year. Growth as at 4.5 percent in 2002 and 5.0 percent in 2003.

However, the figures are still nowhere near the high-flying growth rates in the decade before the crisis.

And the finance ministers also cautioned there were "downside risks" to the growth prospects, in particular the impact of the widening current account and fiscal deficits in the region's main export markets, such as the United States.

Faced with a growing current account deficit and a weak dollar, the United States has been pressuring China and other Asian countries to allow their currencies to strengthen against the greenback to correct the imbalance.

Washington has alleged that regular interventions by Asian central banks to keep their currencies weaker than their real valuations have unfairly made U.S. exports costlier.

The finance ministers, however, said in their statement any currency adjustments by their central banks must be gradual "so as to avoid putting undue stress on the global and regional economic prospects."

"In this respect, the ASEAN countries have adopted demand- strengthening policies which will play a positive role in the global adjustment process."

Singapore's second finance minister, Lim Hng Kiang, who chaired the meeting, warned that "too sharp an adjustment will put undue stress on the financial markets."

Meanwhile, the ministers said they had made progress in efforts to liberalize the financial sector, a crucial pillar of ASEAN's ambitions to create a common market by 2020.

ASEAN groups Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.