World’s Economies Vulnerable U.N. Still Sees Asian Threat

The crisis battering Asian economies may well harm growth prospects next year in the United States and Europe, according to a new U.N. report.

The report forecast moderate economic growth of 2.6 percent in Western Europe this year and 3.7 percent in the United States and Canada, with continuing stagnation in Japan.

But it cautioned that the near-term outlook for the global economy “is now surrounded by a large margin of uncertainty on account of the turbulence” in financial markets. “The crisis is not over yet,” it said.

Stock and currency markets around the world have been buffeted by the turmoil that began last summer in Thailand. International lenders have had to fashion multibillion-dollar bailouts for some troubled Asian economies.

The annual survey released Monday by the Economic Commission for Europe said the economic slowdown in Southeast Asia will curb demand for Western goods and investment, and the fall in Asian stock markets will likely dampen spending by private households.

Moreover, it said weak domestic demand in Japan will have a negative impact on Western Europe and North America.

Southeast Asia and Japan accounted for 22 percent of world imports and 23 percent of world exports in 1996.

“The Asian region was an important source of growth for the Western market economies,” the report said. “This support has been fading in the course of 1997, a tendency which is likely to persist and to slow down world trade in 1998.”

For the United States, the report predicted growth, after adjustment for inflation, of some 2.5 percent.

In Western Europe, it forecast growth in Germany, France, Britain and Italy at about 2.75 percent in 1998, and about 3 percent in the smaller countries.