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.