Bleak future

This year is not going to very pleasant for Asian countries. But the economies will stabilise by next year. According to a report by investment firm Goldman Sachs, the emerging economies will have a worse 1998. But it says that the shocks will be temporary. The four reason which contribute to the slowdown are recessive policies and undervalued real exchange rates prevailing in crisis countries in Asia.

Deceleration in global GDP growth to 2.7 per cent from 3.7 per cent in 1997 combined with a drop in commodity export prices largely due to over supply. Also reduced capital flows to emerging economies as the prospect of high returns in developed countries remain high. Net capital inflows to emerging economies will fall 27 billion to 210 billion in 1998.