Brutal contraction is likely to continue next year. Hope still beckons: lower interest rates world-wide and relief from crushing debts in region

Article Abstract:

A number of economic observers believe that Asia's economic troubles are bound to continue in the short term, with the most likely solution the planned world-wide debt relief and lowering of interest rates. A number of Asian countries are expected to post only an average GDP growth of 1.2% for 1999, after posting an average GDP contraction of 8% for 1998. Only China and Taiwan are expected to post positive growths, 7.5% and 4.4% respectively. The reluctance of creditors to provide debt relief, especially European and Japanese banks, is due to their high exposure to the region. But the planned global decrease in interest rates is bound to help somewhat in the recovery efforts.

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Economists keep trimming their Asian growth forecasts: exports have been disappointing and problems in the financial sector are worse than expected

Article Abstract:

Asian finance analysts and observers are downgrading their original recovery forecasts for Asia, projecting a long drawn-out recovery phase which will last till 1999. This downgrading of recovery forecasts is due to the surfacing of many economic blunders, such as the weakness of many Asian financial sectors in managing their portfolios and the weakening of exports. Observers predict a growth of 0.1% for Japan, a 15% economic contraction for Indonesia and a 3.5% contraction for Thailand GDP, while South Korea is projected to have a growth of only 1.4% by the first quarter of 1999 after four succesive quarters of contraction.

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Hopes for a regional recovery ride on the consumer: some economists say producer-friendly system will have to shift from reliance on exports

Article Abstract:

Asian governments and businesses need to revamp their policies to realize consumer empowerment. Asian economic structures have always favored producers over consumers, with Asian economies focusing on export trade rather than on the potential of domestic trade. Both of these have led not only to the misallocation but also to the misuse of vital resources. More consumer power, however, could not only change these but may also be the key to eventually lead Asia out of the crisis.

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