SE Asian countries to sustain growth

SE Asian countries to sustain growth

MANILA (AFP): Southeast Asian countries' economies will
continue to be the world's fastest growing in 1995, but bankers
warned yesterday that vigilance against inflationary pressures
was needed to sustain the growth.

A paper released at the Southeast Asian Central Bank Governors
Conference (Seacen) here said the region would post a 7.4 percent
growth rate this year, slightly lower than 1194's 7.6 percent.

The paper entitled "Seacen Trends and Outlook 1995," said that
this year's growth would be spurred by high capital investments
and an increase in exports.

It noted that "sound monetary policies and fiscal prudence,"
strengthened the economies of Southeast Asian countries, which
enabled them to weather destabilizing effects of the Mexican peso
crisis.

"The only major setback of the region is predictably the
relatively high growth rate of inflation," due to "excess demand
compounded by shortage of labor," the paper said.

It gave credit however, to "credible anti-inflationary
policies," adopted by Seacen countries that allowed them to keep
inflation down.

Seacen groups Burma, Indonesia, Malaysia, Nepal, Philippines,
Singapore, South Korea, Sri Lanka, Taiwan and Thailand.

Current account deficits were expected to widen in many member
countries, it said but this was no reason for alarm since this
would largely cover capital goods.

This view was supported by International Monetary Fund
executive Director J.E. Ismael who told bankers that "the short-
term loss of foreign exchange may actually yield long-term
benefits," since this has prompted countries to strengthen
"macroeconomic fundamentals and accelerate structural reforms."

The sudden surge of capital inflows brought about by the
liberalization of these countries' financial sectors should be
"channeled into competitive exporting industries with high degree
of technological sophistication," the paper advised.

Investments in power, transportation facilities, communication
links were recommended to be able to sustain the economic growth,
it added.