IMF official briefs SE Asian central bankers

IMF official briefs SE Asian central bankers

BANGKOK (Reuter): The 32nd meeting of the Southeast Asian Central Bank Governors (SEACEN) ended on Friday with participants declining to discuss what had occurred during the closed door, two-day, meeting.

But SEACEN officials issued a communique which said the Executive Director of the International Monetary Fund (IMF) for Southeast Asia, Zamani Abdul Ghani, had briefed the meeting on the world economic outlook.

Zamani said that Gross Domestic Product growth for the Group of Seven industrialized nations is estimated at 2.5 percent, led by the U.S. and Britain.

"Japan and major European industrial countries...may experience lower growth than earlier projected, while smaller countries in western European are likely to be on a firm expansionary path," Zamani said.

Zamani added that while the weaker yen has widened the Japanese trade surplus in recent months, it is not expected to stimulate exports significantly in the future.

He said that developing Asian countries remain dynamic, recovering from the recent cyclical downturn, and will continue to draw the largest share of private capital inflows.

The communique said the Deputy Director of the SEACEN research and training center, Delano Villanueva, told delegates the recent slowing of economic growth in the region was welcome as many economies were showing signs of overheating.

He added that in 1997 the region's economy is expected to grow by 6.7 percent against world growth of 4.0 percent. Inflation is expected to stabilize at around 5.0 percent.

The communique said the next meeting will be held in Bali in February 1998.

The end of meeting was overshadowed by the problems of its host nation, Thailand.

The meeting began on Thursday and after a brief opening ceremony -- at which Thai central bank governor Rerngchai Marakanond spoke -- was closed to the media.

Thursday saw the Thai stock market index plunge by some 3.4 percent to end at a 56-month low of 698.06.

One of the reasons for the fall was negative market reaction to some of Rerngchai's remarks at the opening ceremony about central bank efforts to strengthen finance companies, which have been facing short-term liquidity problems.

The local Thai language media blamed the stock market malaise on Rerngchai.

On Friday, Moody's Investors Service said it may downgrade ratings on Thailand's long-term debt, a move analysts said could heap even more pressure on the weak stock market and baht.

Moody's said the review of Thailand's present A2 rating was prompted by concerns regarding the soundness of Thailand's financial sector as well as constraints on macro-economic policy- making.

The stock market took a dim view of this, and at one stage plummeted by more than four percent.