kemble, all: 07:53 DJS IMF Official Sees Asian Economies Stabilized, Headed Toward Recov
07:53 DJS IMF Official Sees Asian Economies Stabilized, Headed Toward Recovery
SINGAPORE -(Dow Jones)- Asia is half-way along the road to overcoming
its economic crisis, now that economies in the region have stabilized, said
Hubert Neiss, director of the International Monetary Fund's Asia and Pacific
Department, on Friday.
"The next task is recovery," Neiss said in an interview with CNBC Asia
television, an affiliate of Dow Jones & Co., the publisher of this and other
newswires.
In related news, a World Bank conference on corporate recovery in Asia
on Friday said closer attention to micro-level data would have forewarned of
the region's economic crisis. Analysis of what went wrong in Asia has tended
to focus on macroeconomic factors. Critics of the IMF's bailout programs in
Thailand, for example, say its high interest rate policy to stabilize the baht
led to many corporate failures.
Delegates to the World Bank-sponsored meeting considered studies of
nearly 4,000 Asian corporations from five countries, based on data stretching
back to before the region plunged into turmoil in 1997.
Government agencies from Indonesia, Thailand, South Korea, Malaysia and
the Philippines carried out the studies with support from the World Bank.
"Excess capacity was reflected in the pre-crisis data," Mari Pangestu,
executive director of Indonesia's Center for Strategic and International
Studies, told a news conference to mark the close of the three-day conference.
She was referring to the huge oversupply that built up in many Asian
economies during the high-growth years, while asset prices soared many times
above real productive value.
Pangestu said the general consensus among delegates was that high
interest rates had starved viable companies across the region of funds for
production. "In general, credit availability was an issue," she said.
Thailand's Fiscal Policy Office, however, said in a report considered
by the conference that "there was little evidence of a severe credit crunch"
in the country.
According to Thai companies surveyed, 78% said declines in revenue were
the major source of liquidity problems. Fewer companies surveyed said
insufficient supply of credit was a problem.
Indonesia's Pangestu said policymakers must implement macroeconomic
strategies to stimulate domestic demand, but must also pay attention to
corporate and financial restructuring.
"For corporate recovery to take place, it's not enough for one set of
policies," she said.
Meanwhile, Neiss said Indonesia lagged other countries in its progress
toward recovery because its reform process was taking longer, and conceded
that political instability there could slow the reforms further if it
worsened. But he said the IMF was pleased with Indonesia's progress.
Neiss expressed optimism on Japan, saying the government had taken very
strong stimulus steps by easing monetary policy "almost to the limit," passing
a large fiscal package and undertaking "impressive" reform of its banking
system.
He said there was a possibility that Japan would need to act again on
the fiscal front late this year to prevent the fiscal stimulus from fading
away. He also said it was conceivable that Japanese output this year would be
slightly below last year's level.
But he said he believed Japan's stimulus steps would "during this year
produce recovery, and create the support for the recovery to continue."
Eventually, the benefits of Japanese corporate restructuring will
filter through to the economy, though this will take some time, he said.
On Malaysia, Neiss said the government's policies were in line with the
IMF's current judgment in many areas, including expansionary monetary and
fiscal policy and restructuring of banks and corporations. He said the IMF
remained skeptical of capital controls in general, but that in Malaysia's
case, the controls appeared to have given it some "breathing room" to enact
other reforms.
Neiss strongly defended the IMF's record of policy guidance to Asian
countries during the region's crisis, saying that while the IMF might have
handled some specific areas better, with hindsight "our fundamental strategy
would probably remain unchanged."
Copyright (c) 1999 Dow Jones & Company, Inc.
All Rights Reserved.
04/02 7:53a CST
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