Asian economies may need four years to recover: WB

Asian economies may need four years to recover: WB

SINGAPORE (Reuters): Asia's tiger economies may take up to four years to recover from the crisis that has battered them over the last year, a senior World Bank official said yesterday.

Jonathan Fiechter, director of special financial operations at the Washington-based bank, said Thailand, South Korea and Indonesia had all embarked on reforms of their financial systems to try to deal with the chaos that had gripped their markets.

But such reforms were difficult to carry out and the confidence of markets would take time to restore, he said.

"I think this will take two, three, four years to achieve," Fiechter told Reuters in an interview.

"If I have a big fear, it is that things will get too good too soon. And if that happens the fundamental reforms that need to occur might not happen and we are right back in the soup."

He said Bangkok, Seoul and Jakarta all realized that the restructuring of their financial systems would be a long process.

"They realize they have gone through the first tunnel but there are maybe three other tunnels still to pass through," Fiechter said.

Set up in 1944, the World Bank is the West's main agency for the channeling of aid funds to the developing world.

The bank has been supportive of most of the measures suggested by the International Monetary Fund (IMF) to Asia's troubled economies since the financial crisis began last year.

It has stressed the importance of mitigating the impact of the crisis on the region's poor but has agreed with the IMF that the key to any improvement in Asian economies is a sound financial system.

Fiechter earlier told a news conference on the sidelines of a regional seminar on the Asian banking crisis that it was essential that economies facing problems provided financial markets with as much information as possible to encourage confidence among investors.

"Investors simply can't handle uncertainty. They tend to vote with their feet if they don't know what is going on," Fiechter said. "More information is preferred to less -- even if it is negative."

Danny Leipziger, senior manager at the World Bank's Economic Development Institute in Washington, told the news conference the Asian crisis had shown the importance of transparency in economies and the need for fast action to prevent crises from developing.