'Asian recession different than '97'

Agence France Presse, Hong Kong

Economic growth in the Asia-Pacific region, excluding China, will plunge to 1-2 percent this year due to the global slowdown and in the wake of the terrorist attacks on the U.S., the IMF said Monday.

Speaking at the World Economic Forum's three-day East Asia Economic Summit, International Monetary Fund deputy managing director Shigemitsu Sugisaki added the IMF had US$50 billion available to help countries cope with the slowdown.

"Our estimate is, that excluding China, growth in the region is forecast to fall from about 6.5 percent last year down to 1-2 percent this year, so something like a five percentage points decline. That's huge," he told delegates attending the forum.

However, the region would only see a slight recovery in economic growth to 2-3 percent in 2002, he added.

The weakest growth would be seen in Singapore, Taiwan and Hong Kong while the slowdown in other less open nations, namely Philippines, Indonesia and Malaysia was expected to be less pronounced.

"China is the exception in that it will continue to grow around 7 percent," he said.

Sugisaki said although there was limited scope for macroeconomic policy action in Japan, it "must now resume its leadership role in Asia."

Japan could achieve this through decisive action to reform the banking and corporate sectors.

"Resolving the debt issues is really the only way in which to revive the long-term growth prospects," he said.

Although the recovery of East Asian economies was dependent on the global recovery, it did not mean regional countries did not need to take any action themselves, he said.

"(On the) macroeconomic policy front, those with low inflation and a flexible exchange rate -- Singapore, Thailand and Korea -- have more scope to ease monetary policy than those with a fixed exchanged rate."

He called on governments around the region to refrain from the temptation of abandoning structural reform programs in light of the economic slowdown.

"In an environment where markets have a low tolerance for weak markets, structural reforms will serve to build confidence and will help the countries in this region distinguish themselves from other emerging markets," he said.

He said the IMF had stepped up its surveillance activities on countries around the region and "we are also ready to give more financial assistance to countries that are trying implement good policies in the more difficult circumstances.

"I can report to you the IMF has comfortable resources to do so.

The size of the resources available for further assistance is in the order of $50 billion in the near term.

"Hopefully, these resources can be used to prevent crisis rather than to manage crisis," he said.