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Momentum of Structural Reforms Should Be Continued in East Asia: Economists
Continuing structural reform is important for Asian economies, which are just recovering from the financial crisis of 1997 to 1998, to confront another possible economic slowdown, said economists attending the East Asia Economic Summit opened Monday in Hong Kong.
"The nature of current recession in Asia is qualitatively different from the slump of four years ago," Hubert Neiss, chairman of Deutsche Bank Asia, said, "This time, the causes are mainly due to global conditions and not domestic problems such as a deteriorating loan portfolio."
He said U.S. economic slowdown and the lower demand for Asian exports, especially electronic products exports, were the major causes of Asian economies' current situations.
Moreover, as there are so many uncertainties after the September 11 attack, one can not exclude the possibilities of prolonged recession, he said.
However, Neiss also pointed out that he believed the Asian fundamentals are much stronger than that in 1998 as banking and corporate structures have been improved.
"This provides cushion for the impact of the economic downturn," he said," The momentum of restructuring and reform needs to be continued by governments to restore consumer and investors' confidence."
Chief Economist of SG Securities, Singapore Manu Bhaskaran argued that there are reasons of not being too pessimistic about the Asian economic outlook.
There have been "massive" policy responses to the global slump, including interest-rate cuts and stimulus packages and structural reforms in Asian economies have also been accelerated, he said.
Bhaskaran acknowledged that the timing of recovery is difficult to predict. The real issue is whether the Asian economies will continue to commit in the structural changes, especially changes at the bottom-level, he said.
Shigemitsu Sugisaki, deputy managing director of International Monetary Fund (IMF), Washington DC, also said structural reforms will help Asian economies to recover.
"IMF prepared to play its role," the IMF official said.
He announced at the summit that IMF is ready to give more financial assistance to countries for carrying out reforms and IMF has enough financial resources that will be used to prevent crisis.
Sugisaki also estimates that East Asia excluding China would likely grow by 1.2 percent this year, compared to 6.5 percent in 2000 and there will be modest recovery in 2002 of between 2 percent and 3 percent growth.
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