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Gold/Mining/Energy : Canadian Investment Resource Guide -- Ignore unavailable to you. Want to Upgrade?

To: Scott Mc who wrote (138)	2/12/1998 2:21:00 PM
From: Kent C.	Respond to of 591

Fuzzy Logic: When Is Asia Not Like Canada? Analysis by Paul Getman, Senior Economist Written February 8, 1998 Canada is not Thailand In a recent issue of Forbes Magazine (February 9, 1998), money manager Kenneth L. Fisher writes: "The Asian madness is just that: an excuse for a big market correction. Ride it out. The U.S. exports to all of non-Japan Pacific Rim actually total less than two-thirds that of U.S. trade with Canada. When Canada stumbled a few years back, few folks in the U.S. even noticed. So why should we go into a panic over the Pacific Rim's troubles?" At The Dismal Scientist, we're all for avoiding panics, but comparing the meltdown in the non-Japan Pacific Rim countries to Canada's economic difficulties earlier this decade doesn't wash. First, we need to recognize that the sheer size of the economies involved-the gross domestic product for Indonesia, Korea, Thailand, Hong Kong, Malaysia, and Singapore is about four times the size of Canada's GDP. Morgan Stanley estimates that the Asian crisis will reduce world growth this year by 0.8 percentage points. This slowdown in world growth will impact U.S. growth far more than would a very severe recession in Canada. Second, recognize that the depths of the crisis are far, far worse in Asia than anything Canada has experienced: from peak to trough, Canada's GDP fell about 3.5% over two years in the early 1990's. By contrast, here are Morgan Stanley's revised forecasts for 1998 GDP growth for selected Pacific Rim countries: Thailand -8.0% Indonesia -9.0% Singapore 0.0% South Korea -3.5% Third, the economic crisis in Asia has caused the currencies of the Asian Pacific countries to plunge: the Thai Baht has lost over 50% of its value against the U.S. dollar in just a few months. By contrast, the Canadian dollar rose during Canada's last recession. Finally, the Asian crisis is engendering a huge credit crunch, with major banks failing throughout the region. Canada's banking system escaped bruised, but hardly battered, and certainly not insolvent, from that country's recession. To say that the Asian situation is serious, even a crisis, is not to advocate a panic. But it's going to hurt plenty.