Asia Takes the Fast Track

While Europe stumbles and the U.S. slows, the economies of the Far East have hardly broken stride in their race for prosperity. Even as recession engulfed much of the Western world in 1981, most non-Communist Asian nations achieved growth rates of between 3% and 7% for the year. In Hong Kong and Singapore, output surged by 10%. These Pacific powerhouses contributed more to the increase in world production than the U.S., Canada and Europe combined Economists expect that the Asian nations will score similar growth gains in 1982.

This performance was all the more remarkable because the Pacific countries are heavily dependent upon selling their goods abroad. Despite the slump that has softened demand for imports in the U.S. and Europe, many Asian nations have still boosted exports. In the past three months South Korea's sales abroad have risen by 15% and Taiwan's are up 7% from the same period a year ago.

Japan, the biggest and most aggressive Asian challenger, had what it considered a poor year in 1981, with growth of 3.3%. In 1982 the Japanese economy is expected to expand at about the same rate. Inflation, meanwhile is projected to stay at about the current 4%. Thanks to its heavy exports of autos, electronics and other high-technology gear, Japan last year piled up a trade surplus of about $23 billion, as compared with just $2 billion in 1980.

Taiwan, South Korea and Singapore are now mimicking Japan's export-led growth. No longer content to be just peddlers of cheap clothing or cookware these new Japans are moving into heavy industry and consumer electronics Singapore is second to the U.S. in building oil-drilling rigs. South Korea has become a major force in world steel production and shipbuilding and is now sending television sets to the U.S. and automobiles to Great Britain. Taiwan is the fourth largest supplier of machine tools to the U.S. and is moving into minicomputers.

A few Asian nations, though, still face severe problems. In the Philippines, where the economy has suffered under the autocratic rule of President Ferdinand Marcos, unemployment is about 25% in Manila and 15% for the country as a whole. Says Prime Minister Cesar Virata: "A new recession in the industrialized countries would set back government efforts to revitalize the economy."

Indonesia has failed to diversify its exports away from raw materials and has been hurt by falling prices for timber and rubber. The country relies on income from oil exports, but its petroleum reserves may be exhausted within 15 years.

Perhaps the most powerful threat to Asian prosperity is trade protectionism.

As more and more Western companies feel squeezed by foreign competition the pressure grows from industry and labor groups for new barriers to imports The U.S. already has restrictions on the inflow of textiles, steel and other wares The Japanese last year agreed to limit auto exports to the U.S. and some European countries, after being threatened with quotas. Protectionist sentiment, though will be opposed by consumer demands for low-priced imports and by Western governments fighting inflation.

Most economists believe that, while the expansion of Asian exports may slow, it will not crash and end the area's generally strong growth. International specialists at the Bank of America, for instance, project that the Asian economies will grow at an annual rate of 6% or so for the rest of the decade. Very few experts would dare to make such a prediction about the economies of the West.

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