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.