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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (72114)	12/20/1999 9:21:00 AM
From: Les H	Respond to of 132070

Japan is supposed to start issuing 15-year floating rate bonds to fund the stimulus program. That should be interesting. It's becoming more an issue of global supply. FOCUS-Inflation seen up as Asia gets back on feet 01:41 a.m. Dec 16, 1999 Eastern By Tamora Vidaillet SINGAPORE, Dec 16 (Reuters) - Inflation in Asia is on the up as regional economies recover from the financial crisis but its tone is relatively muted, posing no significant threat for now, according to a Reuters poll released on Thursday. Prices are pushing ahead in Hong Kong, Indonesia, the Philippines and South Korea with inflation forecasts showing the greatest upward differential between this year and next. China looked set to remain in deflationary mode from minus 2.7 percent in 1999 to minus 0.6 in 2000, but analysts polled said prices may have bottomed out and that sharply lower interest rates had stoked an upturn in domestic demand. The country witnessed its 25th month of deflation in October when official figures showed the benchmark retail price index fell 2.6 percent from the year earlier. ``Deflation is likely to ease next year as the government's measures aimed at spurring consumption take effect,' said an economist at the China Development Institute in Shenzhen. HONG KONG SEEN ESCAPING DEFLATION Deflation-struck Hong Kong drew the most optimism over its ability to stage a turnaround with forecasts of minus 3.9 percent this year to plus 0.5 percent next year. The territory's currency peg to the U.S. dollar had increased Hong Kong's pain throughout the crisis, undermining its recovery as it strived to remain competitive. But many analysts believed the worst was over and that investor appetite and domestic consumption would pick up into 2000. ``We believe the golden cross, or turning point, for the Hong Kong economy should occur in the middle of 2000, when a liquidity-driven recovery is replaced by a more balanced recovery through improved earnings and profit margins,' said Credit Suisse First Boston in a research report. David Shairp, chief economist at Paribas Asia Equity, saw Hong Kong importing inflation next year, and said wage inflation would remain low while unemployment stayed at around six percent. Indonesia was another country likely to see an inflation pick up, with analysts polled anticipating a figure of 2.8 percent for this year and 7.2 percent next. Although the figures remains well below the 77.63 percent number in 1998. In the Philippines, an expected uptick in consumer prices on the back of stable food prices and the base effect from 1998 were seen as supportive for the headline numbers. Economists also said higher oil prices and a possible firming in interest rates if the government proved unable to control its widening budget deficit could also be a booster. ``This year's inflation was held down by the recovery in agriculture production,' said David Cohen, economist at MMS/S&P. ``We won't be benefiting from that (again). It's already back to a strong level, so there's not that room for recovery that helped keep down the overall CPI in 1999,' he said. PRICES EXPECTED TO NUDGE UP IN SOUTH KOREA The spectre of possible rate tightening in South Korea was given credence by expectations for 3.5 percent inflation growth in 2000. South Korea's economy has attracted strong investment attention in recent weeks, with sentiment over stellar domestic stocks likely to continue into 2000. But risks remain, with many analysts awaiting results of on-going restructuring and the still high rate of non-performing loans. Inflation forecasts for Australia were modest, with no change anticipated between the 2.6 percent forecast for 1999/00 and 2000/01. The Reserve Bank of Australia last hiked official interest rates by 25 basis points to 5.0 percent on November 3, citing a stronger than expected domestic economy and a slight rise in inflation. CPI had been up a little over two percent on the year at the time, with the bank raising the rates for the first time in five years. Analysts' average forecasts for year-on-year inflation: 1999 2000 Dec Dec Australia+ 2.6 2.6 China -2.7 -0.6 Hong Kong -3.9 0.5 India 5.1 5.6 Indonesia 2.8 7.2 Malaysia 2.7 2.9 New Zealand 1.6 2.1 Philippines 4.5 7.6 Singapore 1.7 2.0 South Korea 0.9 3.5 Sri Lanka 6.7 8.5 Taiwan 0.2 1.8 Thailand 0.4 2.7 + Fiscal years 1999/00 and 2000/01, to June 30. Fiscal years 1999/00 and 2000/01, to March 31. ((Asia Forex Desk +65 870 3840))