OECD: Asian 'Dynamic' Economies To Post Slower Growth In 2001
22:48, 2001-05-03
HONG KONG (Dow Jones)--Asia's major 'dynamic' economies are expected to post slower growth of between 4% and 5% this year, following expansion of around 7% in 2000, said a report Thursday from the Organization for Economic Cooperation and Development. The report focused on the major non-OECD's economies in Asia, such as Singapore, Taiwan, Hong Kong and Thailand, which it groups as ``dynamic' economies. Japan and South Korea are the only Asian members of the 30-country organization. In its Economic Outlook report, the Geneva-based group said electronics-focused economies like Malaysia, Singapore and Taiwan will be especially hard hit by the U.S. slowdown this year. The OECD is forecasting 1.75% growth in the U.S. this year and 3% growth in 2002. That weakness will cut Asia's exports, the OECD said. But ``import growth is likely to slow even more sharply as weaker export growth sparks inventory de-stocking,' it said. The flip-side is, according to the OECD, that domestic demand is ``not yet firmly established.'
``Growth in Asian nonmembers could rebound in 2002 if the United States' economy recovers and demand for computers and other electrical products revives with the completion of adjustment in those sectors,' the OECD said.
``The possibility of a greater-than-projected slowdown in Europe and Japan, or a fall in the dollar, pose downside risks to the Asian nonmember outlook,' it said.
The OECD said the example of Taiwan's rising non-performing loans, and equity market losses there and in Hong Kong, highlight the kind of concern the global slowdown has caused in Asia. ``Slower growth has highlighted serious remaining private-sector debt and other structural problems that in some cases now appear worse than anticipated,' the OECD said.
But it doubts the Asian financial crisis will return. ``A reemergence of crisis conditions remains unlikely, given the large current account surpluses, high international reserves and a considerably improved level and structure of external debt compared with that prevailing before the 1997 crisis,' the OECD report said.
It said fiscal policy is constrained in some places but ``most countries retain significant room to sustain or even reinforce expansionary monetary policy, and their room to maneuver has been further increased by declining U.S. interest rates.' -James T. Areddy, Dow Jones Newswires, 852-9424-1/22486, james.areddy@dowjones.com
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