PRESS RELEASE

ASEAN ECONOMIES HAVE RECOVERED FROM CRISIS, MINISTERS AGREE AT JMM

ASEAN ministers attending the five-day 3 d informal Summit Meeting in Manila painted today, Friday, a rosy picture of the region, saying that the regional economies have recovered from the financial crisis which hurt the economies in mid 1997.

This pronouncement was made by the ministers early this morning during the Special Joint Ministerial Meeting (JMM) held at the Philippine International Convention Center (PICC) in Manila.

"The measures that the ASEAN countries have taken individually and collectively have brought about macroeconomic stability," the ministers said.

The ministers, however, said the economic recovery still remains vulnerable to risks within he region and to uncontrollable external factors.

This optimism developed after ASEAN responded to the crisis by accelerating their integration process and by taking decisive measures such as advancing the full implementation of the Asian Free Trade Area (AFTA) to 2002.

For this year, the average ASEAN Gross Domestic Product (GDP) growth will be 2-3 percent, compared to a negative of about seven percent in 1998. Next year, the forecast is about 4-5 percent for the region.

They also said that macroeconomic stability was achieved all over the region as "exchange rates have strengthened and stabilized since mid-1999. With the exception of Laos whose exchange rate continues to decline,"

"The restructuring of the banking and finance sectors has contributed to this," a document from the ASEAN Secretariat said.

In the second quarter of the year, interest rates have considerably dropped below the pre-crisis levels in many countries while the equity markets responded favorably to these positive signals.

Part of the outlook also focused on the real sector which rebounded with the help from the various stimulus packages and the growth in exports.

For instance, the depreciation of currencies has benefitted ASEAN exports and made it an important engine in driving the recovery process, particularly on the aspect of agricultural and other resource-based exports.

"The expansion in world demand, particularly the growth of the US economy, has made it possible. Export growth would have been even faster if it had not been hampered by the shortage of credit to fund imported inputs," the ministers said,

They also mentioned that exports have expanded while imports contracted which are the reasons why trade surpluses among most ASEAN countries occurred thus allowing major increases in the level of international reserves.

In a study on the recovery indicators made by the Asian Development Bank (ADB) through the ASEAN Surveillance Process, it suggested that economic growth in ASEAN is seen to be faster next year, consistent with the forecast of various international institutions.

As indicated in the ASEAN report, the ASEAN economic recovery is on the right track even if there are still uncertainties that face ASEAN countries.

Even as this developed, there is a need to consolidate this progress in order to build a strong foundation for the subsequent steps of the recovery process, the ministers declared.

Amid these positive developments, international donor agencies have warned the negative social impact will persist long after the end of the financial crisis although the social impact is yet to unfold since there is a tag effect in terms of how the economic and financial shock filters down the social system.

Since sustaining economic recovery is very costly, stability has to be maintained so that ASEAN is able to move on the subsequent stages of recovery. "This crisis has drawn attention to the region's state of unpreparedness in dealing with the rapidly changing global economic environment and the shock of the economic downturn."

Other matters that the ministers have discussed revolved around fiscal and debt management, complexity of corporate restructuring, uncertainty in the world market, and the long-term competitiveness of countries within the ASEAN.

As a group, they committed to explore joint actions by learning from each other on debt management, banking and corporate restructuring, development of a domestic bond market in each country and for the region, uncertainty in global demand, globalization, social measures and regional mobility.