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Asian
economies recovering faster than expected |
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News |
June 22, 2000
TOKYO, (AP) - Southeast Asian economies are recovering faster than expected on strong exports of components such as semiconductors and computers, the Japanese government said Wednesday.
South Korea and Malaysia have rebounded especially fast because their economies are geared to supply components for the Internet-led boom in the United States and Japan, the Economic Planning Agency said in its annual white paper on Asian economies.
The International Monetary Fund is projecting that South Korea's gross domestic product - the sum of goods and services produced - will grow 8 percent in fiscal 2000, the second year of growth following a 6.7 percent contraction in 1998.
Malaysia's government expects its economy to grow 5.8 percent, also a second straight year of growth. Many business leaders had predicted it would take Asian economies about five years to recover from a slump prompted by plunging currencies that began in July 1997.
The weaker currencies prevented companies from repaying overseas loans and purchasing imported goods, triggering a financial crisis that sent the region into a severe recession.
Some economies continue to lag. Indonesia's government has said it expects the economy to grow about 4 percent in fiscal 2000, but warned in May that the weak rupiah, political instability and legal uncertainty could pull growth down to 1.5 percent.
To ensure stable long-term growth, the EPA said that additional financial reform is needed throughout the region. Banks must clear their books of non-performing loans in order to resume lending, big industrial combines should be broken up to stimulate competition and regulations must be eased to allow more foreign investment, the EPA said.
"Structural reform is indispensable to ensure stable economic growth, and now is the time to speed up such efforts while economic recovery continues," said Takashi Sakuma, an official in the EPA's overseas research division.
He added that Asia must develop its own market for information technology equipment by improving telecommunications networks and educating people about the Internet. "Information technology diffusion throughout the economies is an important factor to development in the near future," Sakuma said.
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