Regional tensions may hurt S'pore as gateway to SE Asia
Regional tensions may hurt S'pore as gateway to SE Asia
SINGAPORE (Dow Jones): Singapore's role as the gateway for
investment in Southeast Asia could be damaged by persistent
economic and political troubles in the Philippines, Indonesia and
Thailand, American Express Bank Chief Economist John Calverley
said Thursday.
Singapore itself has rebounded solidly from the Asian
financial crisis, and its financial institutions are the
strongest in the region," Calverley said.
"But if Singapore is the gateway to Southeast Asia then it
will be hurt if no one wants to invest in Southeast Asia," he
told reporters at a briefing.
Calverley, based in London, was in Singapore to meet with
clients as part of a seven-city Asian tour.
International investors have grown increasingly wary about
putting their money in the Philippines, Indonesia and Thailand
because of concerns about the pace of economic reforms and
perceived political instability.
The Philippine peso has been particularly hard hit following
allegations that President Joseph Estrada allegedly accepted
millions of dollars in gambling kickbacks. Congress is proceeding
with impeachment charges against him. Estrada has denied the
charges.
Indonesian President Abdurrahman Wahid, the country's first
democratically elected leader has come under pressure to resign
amid allegations he isn't moving fast enough on economic reforms.
The Indonesian currency and stock markets are among the worst
performers in Asia this year.
In Thailand, concerns are mounting that the country could be
faced with a void in leadership following an upcoming general
election.
Thai Prime Minister Chuan Leekpai says a general election will
most likely be held Jan. 6, 2001.
Constitutionally, a new parliament must be convened within 30
days of a general election. But the chances of that happening are
questionable given the fact that Senate elections earlier this
year took nearly five months to complete amid allegations of vote
buying.
For the global economy, Calverley said he sees U.S. growth
continuing to slow next year on the way to a "bumpy soft
landing."
The Federal Reserve's policy making committee probably will
leave short-term interest rates unchanged when it meets Nov. 15
as it continues to gauge the extent of the economic slowdown, he
said. A 25 basis-point increase in rates early next year is a
possibility if it appears wage pressures are pushing inflation
higher, Cleverly added.
The euro, which has been strengthening against the dollar in
recent days, should benefit further from a slowdown in U.S.
growth, he said. American Express Bank's forecast is for the euro
to climb to about $0.95 in 12 months from its current level of
around $0.85.