Asia to take

Asia to take
hit amid
Global fallout

Reuters
Washington

Emerging economies in Asia, except for China and India, will
be hit hard by the global slowdown and the potential economic
fallout of the Sept. 11 attacks on the United States, according
to the International Monetary Fund's World Economic Outlook
released on Wednesday.

The Washington-based lender said the global slowdown,
especially in the high-technology sector, coupled with higher oil
prices, political uncertainty in some countries and weakening
confidence will hit newly industrialized economies such as Taiwan
and Singapore.

While the overall economy of emerging Asia, which includes
India, China, Hong Kong and Korea, is forecast by the IMF to grow
at 5.1 percent this year and 5.9 percent in 2002, many Asian
countries will suffer significant slowdowns.

Singapore's economy, which grew by 9.9 percent last year, will
contract 0.2 percent this year and should grow 4 percent in 2002.
Taiwan's economy will also shrink 1 percent this year after
having grown at 6 percent in 2000, said the fund.

Indonesia, where market sentiment has improved after the
peaceful resolution to its political crisis, will see its economy
grow 3 percent this year and 4.3 percent in 2002. But challenges
such as decentralization and containing inflation remained, the
fund said.

While advanced economies on average should grow 1.3 percent
this year, Japan, once one of the world's strongest economies,
should see its output contract by 0.5 percent in 2001, the fourth
recession in a decade, according to the fund.

The country should see a slight recovery to growth of 0.2
percent next year, the IMF said.

Growth in Asia was forecast to pick up in 2002, as is global
economic activity, and the fund said it was encouraged that
direct foreign investment in Asia held up.

However, the IMF cautioned that these projections were made
before the attacks that rocked the United States on Sept. 11 and
which are likely to shake the global economy in the weeks and
months ahead.

In the wake of the attacks, there exist major risks such as a
prolonged slowdown in America, a delayed recovery in the
technology sector and a bleak future for Japan, the fund said.

Most Asian countries, however, were said by the IMF to be
better prepared than previously to weather such risks because
economic fundamentals have improved since the 1997 Asian crisis,
such as large current account surpluses and flexible exchange
rates.