Stung by sagging US demand for their exports and worried by a falling yen, Southeast Asian countries said today they expect the region's growth to slow to three to five per cent this year from 5.3 per cent in 2000.
The ten members of the Association of Southeast Asian Nations (ASEAN) made the bearish forecast in a communiqué issued at the end of their finance ministers' two-day meeting in Kuala Lumpur.
"In view of the expected slowdown in the global economy, the outlook for the ASEAN countries will be less favourable," the communiqué said.
Export growth in the ASEAN economies has moderated since late last year and foreign direct investment are expected to remain subdued in the near term.
Fast-dropping US demand for goods like computer and electronic equipment have hit the region's export-oriented economies hard.
The benefits of making their products cheaper by weakening their currencies will be offset if the overall market for their goods is shrinking, and southeast Asia will be hoping the American consumer will come to its rescue by the year-end.
Meantime, the yen's recent weakness, which has dragged down their currencies in its wake and dulled Japanese demand for their goods, has added to worries.
"We noted with concern the recent volatility of financial markets and the major currencies, particularly the depreciation of the Japanese yen, which has created uncertainty and instability in regional financial markets and could adversely affect the prospects for continued growth of ASEAN countries," the finance ministers said in their communiqué.