Malaysia predicts 7.2% ASEAN growth in 1997

Malaysia predicts 7.2% ASEAN growth in 1997

KUALA LUMPUR (AFP): ASEAN economies are expected to post higher economic growth averaging 7.2 percent in 1997, a Malaysian government report said yesterday.

The Association of Southeast Asian Nations (ASEAN), which groups Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, is expected to post a 7.0 percent growth this year, it said.

According to the finance ministry's annual economic report, ASEAN growth in 1997 will be fueled by improved exports, high rates of investment and domestic demand.

Growth will be achieved amid low inflation, which is expected to ease to 4. 6 percent next year from 4.8 percent in 1996 and 5.4 percent last year, it said.

ASEAN's current account deficit is also expected to narrow to US$16.1 billion next year from $20 billion this year and a shortfall of $22.2 billion last year, the report said.

The grouping is expected to remain attractive to investors as efforts are further intensified to promote intra-ASEAN trade and other foreign direct investment (FDI).

This year, overall export growth in the region is expected to fall slightly, due to a moderating US economy, a modest outlook for Europe, a global semiconductor glut and loss of competitiveness due to rising currencies.

But total ASEAN trade is expected to remain vibrant, rising 13 percent to $696.7 billion this year from $616 billion in 1995, given the steadier inter-regional trade and investment, the report said.

It projected FDI flows into ASEAN to reach $75 billion this year with continuing liberalization of investment regimes in member states and the privatization of infrastructural projects.

Total investment figures for 1995 were not provided.

But the report said that last year, Japan was the top investor in ASEAN accounting for $13.5 billion, followed by the United States with $9.6 billion, Britain with $7.6 billion and Taiwan with $2.4 billion.

Economic cooperation and investments at the intra-ASEAN level have also accelerated with the formation of regional growth triangles, the report said.

Malaysian firms are expected to invest 11.8 billion ringgit ($4.72 million) in joint ventures in the region between 1994 and 1996, mainly in utilities and infrastructure projects, it added.