Magazine article Business Asia

Regional Update

Magazine article Business Asia

Regional Update

Article excerpt

Business Asia examines New Year developments in some of the key Asia-Pacific nations and their expectations for 1999.

CHINA

Massive state spending powered China's 7.8 per cent growth in 1998, but economists say Asia's fastest-expanding economy could stumble in 1999 unless Beijing manages to kick-start private consumption. Gross domestic product growth in 1998 was just a whisker short of the targeted 8 per cent Yet even government economists say the source of growth -- state-directed investment - raises doubts about its quality and how long it will last.

INDIA

Indian markets will benefit from higher allocations to Asia this year, but the outlook is marred by political and economic problems, an analyst says. "You might see some money coming in by default," said Mr Kush Verma, chief executive of Hamon Consolidated Investment Advisors, adding that the overall outlook for India was "pessimistic". He said Asia would attract more portfolio flows in 1999 and India could hope to get a share of this.

INDONESIA

Indonesia's plans to force owners of troubled banks to help fund its recapitalisation scheme for the stricken bank sector have raised doubts that the country's fallen tycoons can come up with the cash. In its latest budget, Indonesia said it would need 34 trillion rupiah (US$4.25 billion) in the fiscal year to end-March, 2000, for interest payments on bonds which the government will give to eligible banks to help them recapitalise.

MALAYSIA

Malaysia's stock market looks sure to keep rising in early 1999, but the longer-term outlook hinges largely on the easing of tough capital controls which drove foreign investors away last year. …

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