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ADB to again raise growth forecasts for Asia |
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April 13, 2000
MANILA, APR 12 (AP) - The Asian Development Bank (ADB) will raise its economic growth forecasts for Asia once again because the region is recovering more rapidly than expected from its financial crisis, its president said.
The Manila-based bank plans to announce later this month that it expects developing countries in Asia will grow by an average of more than 6 percent this year, President Tadao Chino said. The ADB originally forecast 5.1 percent growth this year for the region, excluding Japan, and raised that to 5.7 percent last November.
"The recovery has been more robust than we forecast before," Chino said in an interview with The Associated Press.
He said government policies across Southeast Asia have helped domestic demand grow, while economic reforms have "strengthened investor confidence in the region so more funds have been flowing in."
The ADB, however, remains concerned about the progress of reforms in some countries, Chino said.
"Much of our concern for the crisis-affected countries lies with the progress of corporate and financial sector reforms and global economic conditions," he said.
He said Indonesia, the hardest-hit economy in Asia's 1997-99 financial crisis, remains vulnerable to external shocks because of its dependence on oil exports and trade within the region.
"On the domestic front," he said, "a major uncertainty is the recovery of private-sector demand, which will in turn be influenced by perceptions over banking and corporate sector reforms."
Chino noted that bad loans in Indonesia's banking system remain high and that while progress has been made in corporate restructuring, much remains to be done.
He indicated the ADB is also concerned over the slow pace of corporate restructuring in Thailand, which has so far mainly taken the form of voluntary negotiations and out-of-court settlements.
"However, the recent decision to declare Thai Petrochemical Industry insolvent will hopefully inspire more confidence in the reform process," he said.
Chino also expressed concern over the pressure building on budget deficits in some East Asian countries from the increased spending that was needed to fund financial-sector bailouts during the crisis.
"Unless handled prudently," he warned, "these pressures could dampen growth prospects."
For Hong Kong, South Korea, Singapore and Taiwan, the ADB is forecasting aggregate growth this year of 6 percent to 7 percent, considerably higher than an earlier estimate of 5.2 percent. Growth in China this year is expected at 6.5 percent, up from an earlier estimate of 6 percent.
For the Philippines, however, Chino appeared rather less bullish, forecasting growth of "around" 4 percent in both 2000 and 2001. The ADB earlier forecast growth of 4.5 percent this year.
Chino said the strength of the recovery in the Philippines would depend on the performance of the agriculture sector and export industries. He said the administration of President Joseph Estrada has been doing a "fairly good job" in addressing economic challenges and tackling poverty programs.
For Southeast Asia as a whole, economic growth this year could reach 5 percent, up from a forecast of 4.4 percent last November, Chino said.
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