Magazine article Business Asia

Glory Days Are Over: Survey

Magazine article Business Asia

Glory Days Are Over: Survey

Article excerpt

Asia's days of rapid growth as experienced in the 1990s are well and truly over, with a new report by BIS Shrapnel forecasting more sedate growth in the first decade of the new millennium for Asia's tigers.

Although the Asian economies are recovering much faster than expected, the report found structural problems will take many years to resolve, capital accumulation and inflows will be lower, and long-term annual growth rates will fall well behind those experienced in the decade before the financial crisis.

BIS Shrapnel forecasts average growth rates of between 5 and 6 per cent over the decade, compared with 8 to 9 per cent between 1986 and 1996.

The report, Asia Pacific Economic Outlook 2000-2010, found that several "crisis" economies remain weak (such as Indonesia), as do countries not at the epicentre of the turmoil (Hong Kong, Japan and Vietnam). It suggests the strength of the upturn has been largely driven by a turnaround in stocks and strong government spending -- both temporary palliatives -- and, therefore, overstates the true strength of the recovery.

"The next stage will be a steady build-up of demand driven by private consumption and exports, which may imply growth falling marginally. Consumption will start to rise, despite a still-worsening labour market, as confidence begins to recover, prices stabilise and asset values improve," the report said.

"Exports will benefit from improved exchange rate competitiveness and from a strengthening of the world economy. …

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