Japan think tank revises down Asian growth outlook

Japan think tank revises down Asian growth outlook

TOKYO (Reuters): The Institute of Developing Economies (IDE), a Japanese think tank, said yesterday it has revised down sharply its growth forecast for the Asian region in calendar 1998.

"One of the main reasons for the revision is the prolonged conflict between Indonesia and the IMF (International Monetary Fund) over conditions attached to IMF lending," said Mitsuru Toida, chief economist of Statistical Research Department of the IDE.

The IDE is a semi-governmental think tank under the Ministry of International Trade and Industry that specializes in the Asian region.

"The other reason is that the severe credit contraction in such countries as Indonesia, Thailand and Korea that are recipients of IMF loans," Toida said.

The credit contraction prevailing in those countries is more extensive and taking place over a longer period of time than the IDE had forecast in December, he said.

Both domestic and foreign financial institutions are reluctant to lend money to companies in Asian nations hit by currency crises, aggravating the financial crisis and drying up liquidity necessary for the real economy, he added.

The following is a breakdown of the IDE's revised forecasts for 1998 in terms of real gross domestic product growth rates

Growth Forecast

Countries Revised Previous

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Thailand -3.0% +5.4%

Indonesia -5.5% +4.1%

Malaysia +4.0% +6.6%

Philippines +3.8% +4.8%

Vietnam +8.5% +8.5%

ASEAN five average -1.3% +5.2%

South Korea +0.4% +3.0%

Taiwan +6.3% +6.6%

Singapore +5.6% +7.3%

Hong Kong +2.6% +3.8%

NIEs average +2.9% +4.5%

China +8.4% +9.0%

Overall East Asia +3.9% +6.2%