Military

DATE=11/30/01

TYPE=CORRESPONDENT REPORT

NUMBER=2-283703

TITLE=U-S ATTACKS / ASIA ECONOMY (L-ONLY)

BYLINE=SCOTT BOBB

DATELINE=BANGKOK

CONTENT=

VOICED AT:

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INTRO: The United Nations says the September attacks in the United States have intensified the first global recession in more than five decades. And it says the economies of Asia and the Pacific -- still reeling from the effect of the 1997 economic crisis -- will be especially hard hit. Correspondent Scott Bobb from Bangkok.

TEXT: The U-N (Economic and Social) Commission for Asia and the Pacific says the world economy was already facing what it calls the first geographically-synchronized slowdown since World War Two. But is says the terrorist attacks in the United States will lower growth rates in the region even more and slow efforts to reduce poverty.

In the first regional assessment since the attacks, the commission Friday said it will also prompt many to re-evaluate policies like privatization, export-driven growth strategies, and globalization.

The chief author of the report, Raj Kumar, says the September attacks quickly affected tourism, aviation, and the insurance and electronics sectors. But he says they have had much deeper impacts.

/// KUMAR ACT ///

There has been a psychological impact on the rest of the economy in term of business plans, investment plans, so that other sectors that may not have been affected in the same way have also not announced big, big investment plans because of the uncertainty that surrounds the whole attack situation.

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The report notes that 40 percent of the region's exports go to the United States and Japan, which are in recession. As a result, they say the region cannot rely on the world's two largest economies to spark an Asian recovery.

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Professor Kumar says the private sector here is not likely to be the engine of recovery either.

/// KUMAR ACT ///

A large part of the private sector, the sector that was responsible for the growth of the region, is in debt. They are in no position to assume the same role that they did in the past. Either you wipe out all the loans they have, so they can borrow again, start again, or, somebody else should take the lead.

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Professor Kumar says as a result, governments in the region must consider whether to reverse the regional trend of privatization and become more involved in the economy.

The report notes that China and India, because of their large domestic markets, have not been hit as hard by the downturn. And they say that China especially could become a small engine for the regional economy.

Experts say only nine of the 61 nations in Asia and the Pacific have benefited from globalization and the economic downturn will lead many to re-evaluate the advantages of opening up their markets.

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Professor Kumar says there will be a re-evaluation of free trade policies, but he says governments should avoid a return to practices of the past.

/// KUMAR ACT ///

(My) first recommendation is don't just start saying I'm closing my doors. Don't start taking up protectionist measures. Keep the economies open. Do undertake the necessary reforms, financial and sector reforms. Good macro-economic policy. Do not slip into the old debt problems.

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Experts say countries in the region should expand trade between each other and they should expand into sectors other than high-tech exports, for example. Most importantly, they should take measures to restore business and investor confidence, which have been eroded by corruption, bureaucracy, and the slow pace of reform.(signed)

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