[asia-apec 535] Re: PECC Media

[Gatt Watchdog]

To: gattwd
Subject: PECC Media
From: gattwd
Reply-To: gattwd at corso.ch.planet.gen.nz (Gatt Watchdog)
Comments: Gatt Watchdog
Message-ID: <Z49gTe1w165w at corso.ch.planet.gen.nz>
Date: Fri, 31 Jul 98 11:17:34 +1200
Organization: PlaNet Gaia Otautahi




























                                                                                     >                                [Image]
>                            PRESS RELEASES  
> 
>    PEO depicts 1998 as "recession year" for the Asia Pacific region
> 
>     ---------------------------------------------------------------
> 
> PECC NEWS -- Embargoed for release at 2 June 1998, 10pm
> 
> Singapore, 2 June, 1998 - The Asian financial crisis marks a sharp
> cyclical turning point in the regional economy of the Asia Pacific,
> and 1998 is best characterised as a recession year. This is according
> to the Pacific Economic Outlook (PEO) 1998-99 report released by the
> Pacific Economic Cooperation Council (PECC), which forecast 2.5%
> average real GDP growth for the region in 1998, significantly down
> from the 4.3% actual weighted average growth in 1997.
> 
> The financial crisis is clearly the major force depressing the region,
> although it has a differential impact on the 20 Pacific economies
> covered by the PEO. A second factor is the economic recession in Japan
> and the yen's depreciation.
> 
> The PEO expects the economies most seriously affected by the financial
> crisis -- Indonesia, Korea and Thailand to contract in 1998. The
> seriously affected include Hong Kong, Malaysia, the Philippines and
> Singapore, and these economies may grow three percentage points less
> than without the financial crisis. The impact of the crisis on all the
> other PEO economies is only indirect, and not very powerful relative
> to other forces. Of these economies, Japan and Russia are predicted to
> experience negative growth.
> 
> The sector most likely to be hardest hit is the domestic financial
> service industry, especially weak banks and other under-capitalized
> financial intermediaries. Many non-financial firms will go bankrupt.
> Domestic investment and construction are being curtailed due to high
> real interest rates, and over-capacity from past investments.
> Consumption is falling with the drop in consumer confidence and
> declining real income.
> 
> The demand for "guest workers" is slowing. Intra-Asia tourism is also
> being hit hard.
> 
> Reflecting the depreciation of currencies, consumer price inflation
> for the region is forecast to increase in 1998, but will remain
> moderate at 3.9 percent, a 0.5 percentage point rise from 1997. One of
> the major reasons is the decline in world commodity prices that also
> partly reflects the Asian turmoil.
> 
> The current account deficit for the region as a whole is forecast to
> rise a bit in 1998. This is entirely accounted for by the further
> expected deterioration in the external accounts of the United Sates.
> 
> The PEO sees the start of a recovery in 1999, but identifies four
> classes of risks to the forecast, all on the downside. These are:
> 
>   1. Excessive monetary contraction in the seriously affected
>      economies.
>   2. Political uncertainty in several economies - especially
>      Australia, Colombia, Indonesia and the Philippines.
>   3. Failure of Japan's fiscal stimulus to foster a recovery of its
>      economy.
>   4. Outside risk of a protectionist backlash as Asia's economies try
>      to grow out of the recession partly by encouraging increased
>      trade surpluses.
> 
> Besides presenting the economic outlook for 1998-1999, PEO 1998-99
> contains a retrospective on the Asian financial crisis. It highlights
> two lessons from the turmoil:
> 
>   1. The importance of having efficient private financial
>      intermediaries - which can be fostered through competition and
>      prudential oversight.
>   2. The importance of transparency and proper accounting standards.
> 
> On other implications, the PEO says "it appears that the financial
> crisis has elevated the status and role of China in East and Southeast
> Asia" - China's decision not to devalue the Renminbi will be crucial
> in preventing another round of competitive depreciations.
> 
> In reviewing the IMF's role in the Asian financial crisis, the PEO is
> of the view that the presence of the IMF is necessary and critical, as
> a lender of last resort to prevent a systemic meltdown and in helping
> to restore confidence. But the IMF can make mistakes. To its credit,
> the IMF has been flexible when it becomes clear that elements in its
> packages are inappropriate. This flexibility will be an essential
> element in restoring and sustaining financial stability.
> 
> The PEO concludes that economies still have much to learn from the
> behaviour of markets, and since markets are constantly changing, this
> means the need for constant consultation, debating and testing of
> hypotheses to learn from each other, and keep pace with markets.
> 
> The annual PEO, which is now in its 10th year, has earned an excellent
> reputation for the accuracy of its prediction of real economic growth
> in the vast and diverse Pacific region. Its first nine forecasts came
> within a half percentage point of actual growth. The PEO report is
> presented each year to senior officials of APEC, where PECC is an
> official observer.
> 
> The PEO is produced by The Asia Foundation on behalf of PECC, with
> major support from Arthur Andersen and contributions by The Chevron
> Corporation.
> 
>                                 - End -
> 
> Issued by the PECC International Secretariat (Singapore).
> For enquiries, please contact Ms Wong Marn Heong, Director (Public
> Affairs) at the PECC Secretariat Tel: 65-7379823, Fax: 65-7379824
>  
> 
>  The PECC is an independent, policy-oriented organization of high
>  level business, academic and government representatives from 23
>  Asia-Pacific economies. It aims to foster economic development in
>  the region by providing a forum for discussion and cooperation in a
>  wide range of economic areas. These include trade and investment
>  policies, financial and capital market developments, human resource
>  development, minerals, energy, food and agriculture, Pacific
>  economic outlook, science and technology, fisheries, transportation
>  and telecommunications. PECC is also the only non-governmental body
>  among the three official observers in APEC.
> ----------------------------------------------------------------------


























ted to experience negative gr