IMF says export doubts cloud outlook for Asia

IMF says export doubts cloud outlook for Asia

Agence France-Presse, Washington

Asian economies are set for a grindingly slow recovery in 2002 and the outlook is clouded by uncertainty over demand for exports, the IMF said in a report Tuesday.

Weak global growth in the wake of the Sept. 11 suicide attacks on U.S. targets was hampering trade-dependent economies in Asia, the IMF's revised World Economic Outlook report said.

The downturn initially was driven by slower U.S. and European growth, recession in Japan and the slide in the global electronics cycle, the International Monetary Fund said, updating its semi-annual outlook to take into account the terror attacks.

"Particularly in a number of the newly industrialized economies, these pressures now appear to have been stronger than earlier thought and have generally intensified since September 11," it added.

The slowdown had spread to include domestic demand and tourism, which was of particular importance to Hong Kong, Singapore, Thailand and Pacific island nations, the IMF said.

Further risks could arise from weak financial sectors, especially in Indonesia, Taiwan and Thailand, the IMF said.

This highlighted the importance of structural reforms to strengthen financial and corporate sectors and sustain confidence in the region, the IMF said.

Lower world interest rates and weaker oil prices would also help most countries. Oil-exporting Indonesia, however, could face tighter financing pressures, the IMF said.

Among newly industrialized Asian countries, South Korean gross domestic product (GDP) growth was expected to step up to 3.2 percent in 2002 from 2.6 percent this year.

Taiwan, Hong Kong and Singapore would all emerge from recession, the IMF forecast.

It expected Taiwan to grow 0.7 percent after a 2.2-percent contraction this year, Hong Kong to expand 1.0 percent after shrinking 0.3 percent and Singapore to climb 1.2 percent after sliding 2.9 percent.

In developing East Asia, Indonesian growth was expected to rise to 3.5 percent in 2002 from 3.2 percent this year, Malaysia to leap to 2.5 percent from 0.3 percent, the Philippines to edge up to 3.2 percent from 2.9 percent and Thailand to accelerate to 2.0 percent from 1.5 percent.

In South Asia, Indian GDP growth was set to accelerate to 5.2 percent in 2002 from 4.4 percent this year while Pakistani growth would rise to 4.4 percent from 3.7 percent.

Chinese GDP growth was set to slow to 6.8 percent next year from 7.3 percent.

Most countries across Asia had relaxed economic policies in response to the worldwide slowdown, the IMF said.

On the fiscal side, Hong Kong, Malaysia and Singapore had eased policy in recent months and South Korea had room for further maneuver.

But high public debt or deficits in countries such as India, Indonesia and the Philippines made it difficult for them to take further fiscal action, the IMF said.