Asian crisis to be protracted: WB

Asian crisis to be protracted: WB

SINGAPORE (AP): Experts who thought the Asian financial crisis
would be short lived are now predicting it will be "painful and
protracted," a regional World Bank official said yesterday, as he
urged regional bankers and governments to restructure, reform and
open up their systems.

Recent estimates "indicate a far more severe collapse in
domestic demand and sluggish growth," than expected in South
Korea, Indonesia and other countries, said Javad Khalilzadeh-
Shirazi, the World Bank regional manager.

"The crisis will be painful and protracted with major social
and economic consequences in a part of the world that was
regarded as an economic miracle," Shirazi said, opening a two-day
seminar on "Global Lessons in Banking Crisis Resolution for East
Asia."

Because of the severe social consequences of the economic
crisis, "an unemployment safety net must be the highest priority
in Asia, to sustain growth in an unstable situation," Shirazi
said.

Many Asian nations do not have unemployment insurance or
extensive welfare benefits. As thousands of people lose their
jobs in an economic crisis, many end up on the city streets, or
go home to their already poor villages.

He said the Institute of International Finance has estimated
that the crisis will cause Asian countries US$100 billion in lost
GDP growth, and that some countries will experience negative
growth ranging from 3 to 12 percent this year.

Separately, a second major investment concern, J.P. Morgan,
said in a report released Monday that Singapore may go into
recession this year. The Singapore government is still predicting
at least 2.5 percent growth, but its economy is strongly tied to
investment and exports to its neighbors.

Singapore's deputy prime minister and head of the de facto
central bank, Lee Hsien Loong, told the banking seminar that
because of the unstable situation, the republic will proceed more
gradually with financial sector reforms "rather than a big bang."

The Monetary Authority of Singapore, which Lee heads, will
increase its supervision of financial institutions, while
encouraging the island's traditionally secretive banks to give
more information, and boost investor confidence.

"Far from the bad news spooking markets, the candor and
openness has boosted confidence that problems will not be swept
under the carpet, or allowed to fester," Lee said.