East Asia Update, November 2002 : Making Pogress in Uncertain Times
This report is written at a time when the East Asia region - having enjoyed a powerful economic rebound in the first half of 2002 is now affected by strong cross-currents and uncertainties in both its external environment and its domestic setting....
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| Format: | Serial |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/636911468247851887/Making-progress-in-uncertain-times-regional-overview http://hdl.handle.net/10986/33501 |
| Summary: | This report is written at a time when
the East Asia region - having enjoyed a powerful economic
rebound in the first half of 2002 is now affected by strong
cross-currents and uncertainties in both its external
environment and its domestic setting. Within the region, the
terrorist attacks at Bali and elsewhere in the region will
depress tourism and business confidence, at least for a
time, taking a toll on the near term growth outlook for
Indonesia in particular. Economic and structural reforms
will increasingly have to share policymakers' crowded
agendas with security concerns, as well with a political
focus on elections that are coming up in several countries
in the next 1-2 years. This year's recovery has been
powered by exports, private consumer spending, and, in some
cases, fiscal stimulus, but private investment spending has
generally remained weak. Hopes that growth by itself would
take care of excessive corporate leverage and distressed
debt in the region have not been met. Debt-equity ratios,
though they have fallen in some instances, remain high by
international standards in most cases, and, together with
low corporate profitability, continue to depress the
investment climate and undermine the prospects for
accelerated medium term growth. East Asian countries can
make progress even in these uncertain times by continuing to
lay stress on some core fundamentals. Improving law and
order and public security is essential for both economic
development and the consolidation of mo re consensual or
representative government. East Asian countries have
weathered recent external shocks quite well because of their
more robust external finances. Careful, prudent
macroeconomic management of both external and domestic
fiscal positions will continue to pay high dividends in the
present volatile global economic and financial environment.
But sound fiscal management has to be married with the need
to pay for the high quality public services that
increasingly sophisticated East Asian societies demand.
Efforts to strengthen governance, administration, and public
financial accountability are therefore critical. Finally,
achieving medium term growth entails tapping the energies of
private individuals, entrepreneurs and firms big and small.
Completing the restructuring agenda left over from the
financial crisis, improving financial sector supervision and
regulation, and undertaking broader reforms to strengthen
the investment climate are all important in this regard. |
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