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Economic Growth of NIEs and ASEAN-4 in 1999 and 2000

June 2000
Ayako FUJITA
Maiko NOGUCHI

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Summary

  1. NIEs and ASEAN-4 have posted a significant economic recovery in 1999 following the severe contraction during the currency crisis in 1998. This recovery has been continuing in 2000.
  2. The rapid recovery in 1999 can be interpreted as a rebound from the steep output falls caused by the shrinking of consumer sentiment and substantial lowering of inventories in the previous year. However, it is also important to note that a favorable economic cycle has started: capacity utilization has risen thanks to strong electronics-related exports and improved consumer sentiment backed by a favorable income outlook and the rapid recovery of equity prices.
  3. The momentum of economic recovery is expected to increase backed by stronger domestic demand in 2000. The Consensus Forecasts indicate higher growth in most countries in 2000.
  4. However, the high growth in the pre-crisis period has not yet been resumed especially in ASEAN-4 because stock adjustment in the construction sector will continue as a result of the negative legacy inherited from the real estate bubble, and also because capital inflows will remain subdued reflecting balance sheet problems in the financial and corporate sectors.

Key terms:
NIEs, ASEAN, Growth forecast, Currency crisis

JEL classifications:
F00, F01, F31