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To: SKIP PAUL who wrote (15820)	9/30/1998 10:10:00 PM
From: SKIP PAUL	Respond to of 152472

The World Bank has predicted that by the end of this year, the Korean economy will be considerably stabilized with its economic restructuring programs making significant progress. In its annual report for 1998, the International Bank for Reconstruction and Development also said that it is essential to properly cope with credit crunch and high interest rates in getting the Asian economies back to normal, according to officials at the Ministry of Finance and Economy. It highly evaluated the progress in Korea and Thailand in riding out the crisis and stabilizing their economies, particularly in such areas as financial sector, competition policy and corporate restructuring, they said. ''There were encouraging signs that the programs (of Korea and Thailand) were beginning to take hold,'' said the Asia Pacific section of the World Development Report for this year. The bank noted two conflicting developments in the economic outlook for East Asia next year. ''Current account balances are moving into positive territory, and if sustained and combined with significant official financial support, they will help improve investor confidence, and build the basis for a recovery,'' it said. In a more negative part of the report, the World Bank noted that sharp cutbacks in investment spending, owing to the decline in foreign financing, weak banking systems and tight monetary and fiscal policies, are countering positive trade developments and threatening the prospects for early economic recovery. ''Investment spending before the crisis was high at 37 percent of gross domestic product, and a resumption of investment is crucial for recovery and growth,'' the report said. Even so, growth recovery of the region will be probably be somewhat slower than initially anticipated, and East Asia's growth rates are unlikely to reach their pre-crisis level without a quick rebound in investment, it said. To avert a new financial difficulties, the report recommended that Asian countries also avoid competitive devaluation of their currencies. As major reasons behind the currency crisis in the region, the IBRD cited the ''mass exodus of international capital, indiscriminate overseas borrowing, negligence of regulation of financial institutions, current account deficits and bubbles in property and stock markets.''