Apec predicts crisis recovery
THE growth of Apec forum members' economies will be hit by stock and currency market instability but a strong recovery is expected, the forum's Economic Outlook says.
Overall growth should fall moderately to 3.1 per cent next year from 3.4 per cent last year.
Thailand and South Korea have revised growth forecasts downward following the recent turmoil.
Korea will fall from 6.7 per cent to 5 per cent while Thailand will dip from 6.7 per cent to 3.5 per cent.
Apec Economic Committee Task Force member Soogil Young said: 'We expect a strong performance [by Apec economies] in the medium term. The recent problems highlight the danger of contagion and the need for co-operation.' The medium-term outlook remains good for Hong Kong, with real gross domestic product expected to grow an average 5 per cent a year to 2000. Inflation is expected to hover at about 8 per cent.
The report states: 'The current period of instability does not alter the fundamentally bright long-term growth prospects for the region.' Speculative behaviour may have aggravated the instability but the crisis also reflects macroeconomic imbalances and policy deficiencies.
'There is clearly a need to strengthen financial sectors in the Apec region with increased reliance on markets and enhanced prudential and regulatory arrangements,' the report says.
'The spillover effects that have accompanied the current crisis illustrate both the increased economic interdependence in the region and the desirability of a high degree of transparency regarding economic and financial policies to enable markets to differentiate between economies and their respective prospects.'