Asians are celebrating the coming of the new year with new hopes for stronger growth in a post-crisis Asia, but the recovery now underway will not run easily in the year 2000 due to new economic risks to the regional economy.

Obviously, Asia's economic performance in 1999 is a pleasant surprise to many people, and even the World Bank and the Asian Development Banks (ADB) had to revise their forecasts for the region several times during the year.

In its latest outlook in November, the ADB projected a 5.7 percent GDP (gross domestic product) growth rate for Asia in 1999, and a same rate in 2000.

Such a projection is identical with that of many economists, who predicted that Asia is likely to see steady growth in the new year after a faster-than-expected recovery in 1999 from a two-year-old regional financial crisis.

No doubt, Asia's performance this year is really remarkable, compared with a 2.3 percent increase a year ago, when some East and Southeast Asian economies fell into a severe recession.

But economists said that despite the rebound, the next year will present struggling nations with new risks.

"A weak US dollar and lack of credit growth are the two key risks to Asia's economic recovery next year," said Chi Lo, senior economist for HSBC Economics & Investment Strategy.

Other economists also cited fragile consumer and business confidence, and renewed weakness of the Japanese economy as new risks to the Asian economy in 2000.

Within the region, the lack of credit growth remains a major risk to economic recovery. In 2000, Asian banks will go through a post-crisis transformation, but their huge non-performing loans, which are as high as 10 percent to 60 percent of the total, could hardly make them lend to sustain GDP growth when credit demand revives.

In Thailand, high levels of non-performing loans cast doubt on the strength of the recovery in 2000, as banks will focus on repairing balance sheets instead of seeking out new lending opportunities, economists said.

While the situation is changing in some economies, such as Malaysia, where new loan approvals almost doubled in the first nine months of this year, a thorough turnaround still needs time in the whole region.

Another risk to the economy is the weak consumer and business confidence. In 1999, recovery in the crisis countries was fueled by government deficit spending, but next year governments will have to ease back fiscal stimulus, because such a move has increased their current account deficit by 5-6 percent of their GDP in 1999.

Although consumers are starting to spend after two years of belt-tightening, the lower employment and lower wages in the crisis-hit economies will prevent high consumption in the new year.

As for the external environment, the uncertain recovery trend in Japan is not good news for Asia. In the third quarter of this year, the Japanese economy shrank at a 3.8 percent annual pace.

"The assumption that there's a modest upswing in the Japanese) economy is likely to be severely questioned," said Robert Feldman, chief economist at Morgan Stanley Japan Ltd.

As Asian economies' major trade partner and creditor, Japan's slow recovery process will affect the region's exports and investment, analysts said.

Also, the US economic situation, including a potential sharp fall of the dollar, is one of the risks to the Asian economy.

Economists said that while this year's main concern was whether the US economic growth will slow down, a growing worry in 2000 will be whether the US financial economy cracks.

A US dollar or stock market crash will bring volatility to world financial markets, and cause instability in Asian markets, which have just returned to normal this year, they said.

Asia, which is full of hopes for a better economic situation in 2000, must be very cautious toward the new risks, economists said. (Xinhua)