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.