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'Your Brakes Are Fine, but the Engine ...'

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The Asian financial crisis won't go away soon.

Until last July, Asia was an engine of growth for the world economy. No more.

"It's in the repair shop - for three years," says Harald Malmgren, a Washington economic consultant. "This engine is going to pull nothing. This will be a prolonged, painful restoration."

Three to five years before it's over, estimates Tim O'Neill, chief economist at Harris Bank/Bank of Montreal in Toronto.

For the United States and Canada, the Asian crisis is in one way "good news," Mr. O'Neill says. By knocking about half a percentage point off economic growth, it should restrain the inflation-sensitive Federal Reserve from raising interest rates.

The crisis will have its worst and most extended consequences in South Korea, Indonesia, and Thailand. O'Neill expects their economies to decline this year and only then slowly revive.

"This is no Mexico," says Mr. Malmgren, referring to Mexico's rapid recovery from the 1995 peso crisis - a comeback not enjoyed fully by many working Mexicans.

And it could get worse. Malmgren reports rumors in the region that Indonesia's military is getting restless.

"There could be a coup," he says.

Observers also worry about the potential for riots against the ethnic Chinese minority, the backbone of Indonesia's business community. Many Chinese are reportedly fleeing or planning to do so.

O'Neill sees three "uncertainties" that could worsen the crisis:

* Korea could fail to satisfy the reforms required by the International Monetary Fund (IMF), bringing financial chaos.

* China could devalue its currency, the renminbi, this summer. Huge currency devaluations by its neighbors put Chinese exports at a competitive disadvantage.

* Japan's economy may weaken further. More trouble in the world's second-largest economy hurts both Asian and Western countries.

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