TOKYO >> A senior official of the Asian Development Bank expressed hope that the Japanese economy will return to a recovery track under the new cabinet to be formed next week and serve as an engine for both regional and global growth. Asian Development Bank
to focus Hawaii meeting
on Japan recovery, exec saysKyodo News Service
ADB Vice President Shin Myoung Ho said the Japanese economy will hopefully recover "with a more determined political commitment and by introducing more prudent economic policies under political stability." But also, Shin said, the outlook of the U.S. economy and its effect on Asia will be a main agenda item during the bank's annual meeting in Honolulu next month.
Shin said in Tokyo that political stability is critical both for developing economies and industrialized countries to achieve sustainable growth.
But he said political uncertainties in Asia, such as internal conflicts in Indonesia, could be a risk factor to regional economies.
In Japan, a new cabinet will be formed under a new prime minister following Tuesday's presidential election of the ruling Liberal Democratic Party (LDP). The presidency of the LDP usually carries the job of premier of Japan because of the party's long dominance of the House of Representatives, which has the final say in selecting a premier.
Shin said Japan has struggled with low economic growth rates in recent years, but low growth could be bolstered in 2001 and 2002 with supportive fiscal and monetary policies.
"We are projecting about 1 percent to 2 percent economic growth (in Japan) in 2001 and 2002," he said.
The Japanese government projects the economy to grow 1.7 percent for fiscal 2001 ending March 31, 2002, although the government and the Bank of Japan have downgraded their economic assessments and said the recovery has stalled due to a deceleration of exports and sluggish industrial production.
The ADB said the slower growth in 2001 is due to lower demand for Asian products, especially stemming from a slowdown of the U.S. economy.
But Shin said the slowdown "will not be severe and not persist for a long time" because the U.S. economy's fundamentals remain strong and it has more room for policy options.
He also said Asia's intra-regional trade has increased substantially since the financial crisis of 1997 and 1998, which has added "some self-sustainability power in this region."
Shin, however, said there are risks to the regional economy, such as a worse-than-expected slowdown of the U.S. economy and political uncertainties in some Asian countries.
In addition to discussing the U.S. economy in Honolulu next month, Shin said, the implementation of the ADB's poverty reduction strategies and discussion on maximizing the benefits and minimizing the risks of economic globalization are also major topics for discussion.
On the sidelines of the ADB meeting, the Association of Southeast Asian Nations and its three East Asian partners --China, Japan and South Korea -- will discuss a planned network of bilateral currency swap agreements.
The arrangements are aimed at linking the 10 ASEAN members' international reserves with those of their three partners through bilateral pacts to avoid a recurrence of the financial crisis.