SE Asian economic growth to slow

SE Asian economic growth to slow

MANILA (AFP): Rapid economic growth in Southeast Asia is expected to slow in 1996 and 1997 while South Asian growth accelerates, the Asian Development Bank (ADB) said yesterday.

ADB senior economist Vishwanath Desai said Asian economies would have an average gross domestic product (GDP) growth of 7.3 percent in 1996 and 1997, almost three times the world average.

But this was still down from 8.3 and 7.9 percent GDP growth posted in 1994 and 1995 respectively.

The reduction was "a healthy development" caused partly by the policies of countries like China, Indonesia and Malaysia, to prevent their economies from overheating, he said.

Desai said the region had also suffered a "substantial moderation of export growth" from 28 percent growth in the first half of 1995 to 7 percent in the same period this year.

However inflation was expected to ease from a regional average of 8.5 percent for the whole of last year to a projected high of six percent this year.

The decline in exports was attributed to tighter monetary and fiscal policies and a slump in the global market for semiconductors and electronics, said Ernesto Pernia, another ADB economist.

However the ADB economists shrugged off growing fears that Asia's massive export-led growth was over.

"This is something that we will recover from in a reasonable period of time," Pernia said.

Desai added that there were already signs that China's export growth was starting to recover and that the decline in electronics exports was bottoming out.

"By the end of the year, we will see a reasonable upturn in exports," Desai added.

The updated ADB Asian Economic Outlook report said the average GDP growth rate of Hong Kong, Singapore, South Korea and Taiwan would fall to 6.2 percent annually in 1996 and 1997, compared to 7.4 percent in 1995.

Singapore's individual GDP growth would suffer the biggest fall with a 6.5 and 7.0 percent growth in 1996 and 1997 respectively, compared to 8.9 percent in 1995.

China's growth would decline from 10.2 percent in 1995 to 9.5 percent annually in 1996 and 1997.

This was a sign that the Chinese economy was "making its legendary soft landing," said another ADB economist, Dilip Das.

The remaining Southeast Asian, countries meanwhile, would average 7.3 percent GDP growth in 1996 and 1997 respectively, down from 8.1 percent in 1995, the report said.

Thailand's GDP growth was forecast at 6.6 percent in 1996 and 7.0 percent in 1997, down from 8.7 percent in 1995.

Other Southeast Asian countries, such as Cambodia, Laos and the Philippines would experience higher growth rates in 1996 and 1997, compared to 1995, the report said.

However, economic reforms and strong agricultural output in India, Nepal and Pakistan would contribute to a rise in average GDP growth in the South Asian region to 6.6 percent in 1996 and 6.3 percent in 1997, compared to 5.9 percent in 1995.

Sri Lanka, plagued with political problems, is expected to suffer a slowdown in its GDP growth to 3.6 percent in 1996 and five percent in 1997, from 5.5 percent growth in 1995, Pernia said.

The Asian Economic Outlook report follows a workshop of ADB experts on recent macroeconomic developments and short-term prospects for the bank's developing member countries.