JAPAN-Nikkei-Time to go back up? Message Board

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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up?

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To: fut_trade who wrote (1600)	11/14/1998 12:11:00 AM
From: borb	Read Replies (1) of 3902

SYDNEY, Nov 13 (Reuters) - The recent stability in financial markets and signs of recovery in some Asian economies did not mean that a full scale regional recovery is yet on the cards, U.S. economist Paul Krugman said on Friday. ''I hope I am wrong but I don't think there is a deep, full-scale recovery anywhere in prospect,'' Krugman, economics professor at the Massachusetts Institute of Technology, told a First Boston conference here. Noting the recent recovery in confidence in financial markets, Krugman said ''there is a little bit of a bounce that comes when the panic has subsided. But it leaves behind a deep set of problems that if they were not structural when we started they are structural now.'' He cited the massive overhang of bad debts of Asian companies which have been exacerbated by high interest rates that were put in place over the last year. Some return to economic growth should be expected when the acute stage of the crisis is over. ''But a little bit of growth does not signal the end of the whole crisis,'' he said. He said the near-euphoria in Asia in recent weeks has been driven by the rise of the yen. ''But I don't see any fundamental reason for that rise,'' he said. He also cautioned that risks to the region remain from a a possible devaluation of the Chinese currency, the yuan. ''I think they could get through 1999 without devaluing, but the pressures have got to be growing. It's hard to see how China can go on indefinitely without a yuan devaluation,'' Krugman said in response to questions after the speech.

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