Indonesia still vulnerable to external shocks: ADB
Indonesia still vulnerable to external shocks: ADB
MANILA (AP): The president of the Manila-based Asian Development Bank Tadao Chino said here on Wednesday that Indonesia remains vulnerable to external shocks because of its dependence on oil exports and trade within the region.
"On the domestic front," he said, "a major uncertainty is the recovery of private-sector demand, which will in turn be influenced by perceptions over banking and corporate sector reforms."
Chino noted that bad loans in Indonesia's banking system remain high and that while progress has been made in corporate restructuring, much remains to be done.
ADB says that the economic recovery in the Asian region is recovering more rapidly than expected from its financial crisis.
The Manila-based bank plans to announce later this month that it expects developing countries in Asia will grow by an average of more than 6 percent this year, President Tadao Chino said.
The ADB originally forecast 5.1 percent growth this year for the region, excluding Japan, and raised that to 5.7 percent last November.
"The recovery has been more robust than we forecast before," Chino said in an interview with The Associated Press.
He said government policies across Southeast Asia have helped domestic demand grow, while economic reforms have "strengthened investor confidence in the region so more funds have been flowing in."
The ADB, however, remains concerned about the progress of reforms in some countries including Indonesia, Chino said.
He indicated the ADB is also concerned over the slow pace of corporate restructuring in Thailand, which has so far mainly taken the form of voluntary negotiations and out-of-court settlements.
For Hong Kong, South Korea, Singapore and Taiwan, the ADB is forecasting aggregate growth this year of 6 percent to 7 percent, considerably higher than an earlier estimate of 5.2 percent. Growth in China this year is expected at 6.5 percent, up from an earlier estimate of 6 percent.
For the Philippines, however, Chino appeared rather less bullish, forecasting growth of "around" 4 percent in both 2000 and 2001. The ADB earlier forecast growth of 4.5 percent this year.
Chino said that there may be a role for a new Asian monetary fund to help countries hit by financial problems, but the International Monetary Fund should continue to take the lead in responding to future crises.
"I think the concept (of an Asian fund) is one of the ideas which Asian countries could consider over the medium term," he added.
"But I believe the IMF should be the lead agency for handling liquidity crises," Chino added.