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.