|
June 3, 1998
Latin America Outperformed
Asian Economies for First Time
By EDUARDO LACHICA
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- Most of the Pacific Rim's star economies in 1997 were in
the Americas, said a regional report, underscoring how Asia's financial
crisis has turned the tables in regional economic performance.
Last year, for the first time that anyone can remember, Latin America's
developing nations outdid those of East Asia, according to the Pacific
Economic Cooperation Council in its latest regional economic outlook.
Only two of the seven economies that the council said were 1997's "star
performers" are in Asia: Taiwan and Hong Kong. The others are the U.S.,
Canada, Colombia, Mexico and Peru. All seven economies earned their
kudos by combining accelerated growth with declining inflation.
What's more, the council predicts that only Australia and Colombia will
grow faster this year than in 1997 -- thanks mainly to domestic factors
that are offsetting the negative effects of the problems that have hit
Asia.
Indeed, the council said, all economies lining the Pacific Ocean are
being affected by the Asian financial crisis in varying degrees.
Indonesia, South Korea, and Thailand -- which have turned to the
International Monetary Fund for economic reform and rescue programs --
are the "most seriously affected." Hong Kong, Malaysia, the Philippines
and Singapore are just "seriously affected," while the rest are
"indirectly affected," the report said.
The council forecasts that five of the 20 Pacific Rim economies it
monitors will shrink this year: Indonesia, Japan, South Korea, Russia
and Thailand. It figures that the full effect of last year's drops in
Asian currencies and spiraling debt burdens will be felt in 1998. In
1997, thanks to strong growth in the U.S., China and Mexico, growth for
all 20 Pacific Rim economies averaged 4.3%, three-tenths of a percentage
point better than in 1996. In 1998, however, the council expects that
average to fall to 2.5%. Bankruptcies will rise, domestic investment and
construction will be curtailed by high interest rates while
intraregional tourism will suffer, the outlook predicted.
The council expects the Pacific region to regain financial stability by
the end of 1998 and to be on a path toward economic recovery in 1999. If
that happens, the region will be able to raise its average growth rate
to 3.5% in 1999.
The council's annual outlook is based on data contributed by teams of
forecasters in each country. The effort is coordinated by Lawrence
Krause, a professor at the University of California, San Diego, with the
help of the Asia Foundation and accounting firm Arthur Andersen.
Return to top of page | Format for printing
Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved. |
