The Market Economies of Southeast Asia in 1985: Asean Pays the Price

Abstract

The opdmism and confidence encountered in fastest growing region of the world has given way to pessimism and gloom over the prospects for further growth in the of the Association of Southeast Asian Nations (ASEAN). Growth rates have declined for all the member countries, and for the first time in twenty years Singapore, one of the four newly industrialized countries (NICs) in the Western Pacific and a leader of economic development in the region, recorded negative growth. Paradoxically, it was the problem-child of ASEAN, the Philippines, that, at least statistically, improved its growth performance: the rate of contracdon was reduced from 4.5 per cent in 1984 to 3.7 per cent in 1985. The weighted average growth in ASEAN as a whole fell from 4.6 per cent in 1984 to 1.7 per cent in 1985. In the course of 1985, expectations were that growth would pick up in 1986 (to about 3.2 per cent for ASEAN as a whole, according to the Asian Wail Street Journal of 14 October 1985), but this view now appears too optimistic and not at all in line with the pervading gloom in the region. Much has been written about the reasons for the downturn in the individual economies of Southeast Asia. There is substantial agreement on the main causes for the recession, but opinions differ with regard to the outlook for the future. While, on the one hand, most economists would expect to see all the ASEAN growing again in one or two years time, some voices suggest that a turning point in the economic development of the region has been reached and predict further decline in the years to come. In any case, only the most incurable optimists expect the ASEAN to grow once more at the pace set in the last decade.