Greater China, ASEAN to lead world growth

Greater China, ASEAN to lead world growth

SINGAPORE (AFP): Asia will dominate world economic growth in 1997 with Greater China and Southeast Asia leading the way into the 21st century, Economist Intelligence Unit (EIU) analysts said yesterday.

Despite an economic slowdown in some key economies, China, Taiwan, Hong Kong and the seven-member Association of Southeast Asian Nations (ASEAN) were forecast to collectively enjoy robust growth in the medium term.

"I've got my money on both ... Greater China (will grow) by just under eight percent over the next five years, and ASEAN by about 7.3 percent," said Ken Davies, senior regional economist for the EIU.

ASEAN includes Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The EIU, part of the London-based Economist publishing and business information group, listed China, Vietnam and Malaysia as the second, third and fourth fastest-growing economies in 1997 in its annual World Economic Outlook.

Iraq topped the list because of its resumption of oil sales and the extremely low base against which the new growth is being compared.

Ten Asian countries made it to the top 20 list of the EIU, which forecast world economic growth this year to be unchanged at 2.9 percent, with the impetus coming from developing nations. Growth among industrial nations belonging to the Organization for Economic Cooperation and Development (OECD) was estimated at 2.4 percent.

Asia and Australia except Japan would grow by a relatively moderate 6.5 percent in 1997, the EIU said, citing a slowdown in exports and efforts to cool down overheating economies with tighter monetary policies.

The so-called Asian tigers -- Hong Kong, South Korea, Singapore and Taiwan -- have lately seen slower growth compared to the heady days of double-digit expansion but Davies said prospects were "still reasonably positive."

Describing the slowdown as largely cyclical, Davies told AFP that exports would pick up this year amid added capacity and increased investment.

On the current labor unrest in South Korea, Davies said that the campaign against controversial new labor laws could affect exports but if the situation normalizes, the effects would be temporary and the backlog would be filled.

The Philippines, which has bucked the slowdown trend in Southeast Asia, should see growth of around 6.5 percent by 2000, he said.

"We're forecasting a gradual acceleration in growth going above six percent, which is tremendous really. Back in the early nineties the economy was depressed for political reasons and because of the power cuts," he said.

On Malaysia, he said: "We're reasonably bullish ... we don't really think that growth rates are going to fall below eight percent."

China has achieved "a really successful soft landing" from the double-digit growth rates it once enjoyed, and its economy was forecast to expand by 9.3 percent this year.

"Below 10 percent, nine-to-10 percent, they can sustain," Davies said.

The EIU report said Latin America and the Carribean would fare better than last year with average GDP growth of 3.6 percent in 1997, but the report described this as "slightly disappointing."

In the Middle East, Iraq would be the exception as other countries face economic and fiscal constraints. Six Middle East countries including Saudi Arabia and Iran were listed among the 20 slowest-growing economies in 1997.

Iraq's gross domestic product (GDP) was forecast to grow 30 percent in 1997, after posting double-digit negative rates from 1991-95.

"The oil sales and the gradual reintegration of Iraq into the world economy are going to mean quite a sharp recovery," Davies said.