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To: denekin who wrote (22960)	11/15/1998 12:23:00 PM
From: Alex	Read Replies (1) \| Respond to of 116790

THE YEAR(S) OF THE TORTOISE Asian economies will crawl before they walk ------------------------------------------------------------------------ Bumping along the bottom the latest forecasts call for more of the same THOSE WHO LOOK FOR comfort in statistics might wish to avoid the annual economic forecast by the Pacific Economic Cooperation Council (PECC). The independent organization, made up of academic, government and business members from 23 economies, sees an end to the "spiraling downturn" that characterized 1998. But growth will return only slowly to the Pacific region over the next two years, and the risk of global recession remains. Next year will see a bottoming for many economies. For the region as a whole, expansion will be restrained by a distinct slowdown in the U.S., according to the PECC's forecast update, released this month. Growth in the region should hit 1.9% in 1999 and rise to 2.8% in 2000 - if stimulative measures in Japan are effective. Threatening this mild rebound are possible economic collapse in South America, continuing deflation in commodity prices, or a rebirth of trade protectionism. For a fuller briefing, Asiaweek's Assif Shameen talked to JEAN-MICHEL SEVERINO, the World Bank's vice president for East Asia and the Pacific: Stock markets across Asia are rising. Does this signal a real recovery? Markets are making a good assessment of regional restructuring efforts and macroeconomic policies. There is a new sense of confidence. Some investors are starting to see that, after devaluation and the collapse of asset prices, there are some attractive investment opportunities. But we are all aware that the recovery process is still very fragile. So there is more pain to come? Economic forecasts for the next two quarters in most of Asia are still gloomy. But we can now say that there will be recovery at some point next year. We are close to the bottom. Are you pleased with the economic restructuring in the worst-hit countries? Both Korea and Thailand still have some way to go, but they are seeing some results and are continuing to move in the right direction. As they start to see the fruits, other countries that postponed reforms will start to realize that the pain of the last year was worthwhile. What about Indonesia? Indonesia faces additional institutional and political problems. There is huge external debt exposure on the corporate side. It is true the rupiah has appreciated dramatically in the past month or two, but fundamentals have become weaker. Have the Malaysians told you they might lift capital controls? No. But nobody expects capital controls to stay forever. I think at some point they will start to see that controls will not bring the expected benefits. Malaysia has started well on bank restructuring and recapitalization. They must now turn to corporate restructuring. We hope it will be conducted with greater transparency. Is the World Bank worried about the collapse of China investment companies? We are monitoring developments and we think the Chinese authorities have so far handled things very well. More important [than investment company reform] is the restructuring and recapitalization of the debt-laden state-owned banks. China is gradually reforming the financial sector but the progress has been too slow. pathfinder.com