Battered SE Asian economies worsening

Battered SE Asian economies worsening

Ruth Youngblood, Deutche PA, Singapore

The battered economies of Southeast Asia, ricocheting from bad
to worse amid crumbling demand from the United States, are
clinging to glimmers of a tenuous recovery in 2002.

The outlook for the trade-dependent countries hit by a global
slowdown was not encouraging even before Sept.11, but the
terrorist attacks on the region's biggest export destination
rendered prospects far bleaker.

"Ultimately, recovery depends on the U.S.," said Paul
Schymyck, economist with the Independent Economic Analysis
(IDEA).

"If the U.S. recession persists, things can get worse," he
said.

Most of Southeast Asia is being stalked by the specter of
recession marked by low growth, strategists note, with Singapore,
Malaysia, the Philippines and Thailand hard hit by the uncertain
outlook for exports - predominantly electronics.

Singapore, the best performing economy in the Association of
Southeast Asian Nations (ASEAN) with 9.9 percent growth last
year, is in its worst recession since independence in 1965, and
sliding towards a 3 percent contraction this year, clobbered by
lost dominance in disc drive and microchip export.

Malaysian Prime Minister Mahathir Mohamad is counting on a
rise in consumption in the fourth quarter for "just a little bit"
of growth to offset the faltering electronics demand and weak
agricultural output, which led to a 1.3 percent contraction in
the third quarter, the economy's first shrinkage in more than two
years.

The plunge in shipments of electronics, the Philippine's
biggest dollar-earner sector, combined with slumping foreign
direct investments has prompted economic planners to bank on the
cushion of domestic demand to achieve a year-end growth target of
3.3 percent.

Thailand's economic outlook has also darkened, with exports
contracting, but an extensive agricultural sector and a rebound
in tourism hard hit by the Sept.11 attacks have triggered
expectations of 1.3 to 1.8 percent growth.

The government of Indonesian President Megawati Soekarnoputri
predicts the economy will grow by 3.5 percent on public
consumption this year, but has yet to come close to finding
solutions to the myriad of economic problems hounding the country
after three years of political inertia.

Still, the Asian Development Bank (ADB) is forecasting a
"subdued" rebound for the region by the middle of 2002,
contingent on a U.S. recovery.

The most ambitious overhauling is under way in Singapore,
where an economic review committee led by Deputy Prime Minister
Lee Hsien Loong is designing a blueprint to ensure the city-state
remains a vital business center.

With 25,000 jobs expected to be lost this year and the
government maintaining a minus 2 to plus 2 percent growth
forecast for next, virtually all areas are under scrutiny - the
reliance on manufacturing, a rigid educational system, lack of
entrepreneurs and policies on taxation and pensions.

The 38,000 people left jobless in Malaysia have sent
confidence for employment prospects plummeting.

In the Philippines 53,000 workers lost their jobs through
October due to company closures or retrenchment, pushing the
unemployment rate to 10.1 percent.

After three presidents in three years, optimism greeted
Megawati's July victory, a sentiment eroded by the slow-motion
style of her cabinet.

"We all know the problems, but there are no human resources to
implement the solutions," said economist Pande Radja Silalahi at
the Center for Strategic and International Studies.