World Bank sees growth as way out of crisis

Facing "absolutely unprecedented" crisis in Asian economies, the World Bank yesterday called for making economic growth the top priority in efforts to help Asia recover.

The move differed sharply from the IMF's approach of pushing more for stability and tight monetary policy in developing countries, often at the expense - in the short term - of economic growth.

The Bank's call for a strategy aimed at spurring growth quickly was also a shift from its traditional focus on structural reforms and direct anti-poverty programmes.

"I don't want to make you cry," said Bank vice-president Jean-Michel Severino, at a press conference in Washington yesterday to publicise release of the Bank's first report on the Asian financial crisis. "But the situation in the region is just terrible," he said. "This crisis is absolutely unprecedented. Its magnitude is incredible."

The World Bank's new report, East Asia: The Road To Recovery, calls for boosting fiscal spending to spur growth in Indonesia, Malaysia, Thailand and South Korea, alongside reforms of the countries' financial sectors.

According to Mr Severino, the east Asian region, "which was our success story, has become - in the eyes of many - a failure".

The new World Bank report also sounded an urgent call for measures to protect low-income groups in the region while macroeconomic and finance-sector remedies run their course.

Mr Severino conveyed thanks to both Japan and the European Union for creating special funds to aid Asia's recovery, and reported that the World Bank has doubled its disbursements to the East Asian region, giving $8 billion in aid since July.

In the preceding 12 months - the fiscal year from July 1997 to July 1998 - the Bank had disbursed $4.5 billion, Mr Severino said.