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.