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Monday, 19 March, 2001, 15:29 GMT
Growth to slow in Asia
![]() In Malaysia, the government hopes that a one month sale in all shops will help curb inflation.
Economic growth will slow dramatically in several East Asian economies as a direct consequence of the weakness in the US, their most important export market, the Asian Development Bank (ADB) warned on Monday.
"The average growth rate for the affected countries is expected to slow to 4% from an estimated 7.1% in 2000," the Bank said. Electronic slump The Bank also warned of a sharp fall in demand for electronic goods.
Last year, demand for electronic goods rose 83%. This year it is predicted to fall by 9.5%, the Bank reported. "What this basically means is that the external shocks could be higher," said ADB economist Pradumna Rana. "People might underestimate how much Asia, [not including] Japan, could suffer from a global slowdown," agreed Rob Subbaraman of Lehman Brothers in Tokyo. Japan worries The economic crisis in Japan is making matters worse for East Asia as well, said economists.
Either they must keep their currencies strong, but if they do they will lose market share to cheaper Japanese exports. Or they must devalue their currencies, a move that will hit consumer confidence in their own countries. "Seeing currencies around the region going down will dent whatever domestic demand there is, so you could get a further downleg in gross domestic product growth and even deeper inflation," said Tim Condon of ING Barings.
Mr Subbaraman said the outlook is bleak. "If Asia is going to be hit by a double-whammy of Japan as well as the US, the effect could be a lot more than in the past," he said. Optimism Other economists disagree.
This should help sustain exports from other countries in the region, predicted Morgan Stanley Dean Witter's Andy Xie. In addition, economic growth in China should aid further growth in East Asia, predicted Yenpao Chen, director of forecasting at the Chung-Hua Institution for Economic Research. "If Japan is slowing down and the United States is contracting, probably the market in mainland China is what we have to count on," he said. Troubled region But East Asia's recovery from the last economic crisis is far from complete.
In Thailand, hundreds of unfinished towerblocks bear testimony to the way its economy ran out of cash three years ago. In Malaysia, the stock market has lost almost 10% of its value since the beginning of the year, and while shares have become cheaper everything else has become more expensive with inflation climbing sharply. It is not very different elsewhere in the region, where angry workers have taken to the streets to protest the effects of globalisation on their job security, on their salary levels, and on their lives. |
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