Oil price, U.S. slowdown to depress APEC growth

Oil price, U.S. slowdown to depress APEC growth

BANDAR SERI BEGAWAN (AFP): Surging oil prices and a slowdown in the United States will depress growth among members of the Asia Pacific Economic Cooperation forum, APEC said on Saturday.

The 21-member APEC region is likely to post growth of about 3.5 percent in 2001 from a projected 4.3 percent this year, said a report by the APEC economic committee released as the Pacific- rim group met in Brunei.

"Since this slowdown is due largely to the moderation of growth in the U.S. to a more sustainable pace, the positive trends of APEC economies will continue next year," the report said.

However, a whole percentage point could be lopped off next year's growth forecast if crude oil continued to fetch around US$35 a barrel for a prolonged period, said the committee's chairman, Mitsuru Taniuchi.

"In the upcoming leaders' summit, they will discuss the oil price issue, and it is possible that leaders and ministers will call for an increase in oil supply," he told a briefing.

APEC leaders including U.S. President Bill Clinton will hold a two-day summit from Wednesday in oil-rich Brunei.

"Higher oil prices, if sustained, could pose a downside risk on the generally positive outlook of APEC economies through next year," APEC warned.

For now at least, inflation among APEC members was tame and East Asian countries were bouncing back from the 1997 financial crisis, the report said.

"All Asian developing economies will sustain robust growth at 4 to 8 percent in 2001," it said. "However, much remains to be done for banking and corporate restructuring."

Growth in the United States would slow to about 3 percent next year as Federal Reserve interest-rate rises fed through, and Japan was finally on the mend after a decade-long slump, APEC said.

"The recovery in Russia will continue, with higher oil prices supporting domestic demand," the report added.

The Latin American APEC members -- Chile, Mexico and Peru -- "will keep up the pace of growth in 2000 through 2001, growing at a respectable 4 to 6 percent."

In the longer term, Asian countries had to overcome the "digital divide" separating the information-technology haves from the have-nots, the report said.

Countries such as Singapore and Taiwan had shown the way forward in building "knowledge-based economies" (KBEs), by improving education and fostering Internet use, it said.