By Bernama
Danang (Vietnam) : The Asian region is not at risk of another financial crisis similar to the 1997 meltdown, a top International Monetary Fund (IMF) official said on Wednesday.
Daniel Citrin, IMF’s deputy director (Asia Pacific department), said the current situation was completely different from 11 years ago.
He said the region’s financial policy, fundamentals and fiscal situation are strong, with little exposure to the subprime crisis in the United States.
“Asian banks are less exposed to the US subprime problem and the situation is not as bad compared to the US,” he told reporters on the sidelines of the informal Asean Plus 3 Finance and Central Bank Deputies’ Meeting here today.
Citrin, however, said the economic slowdown in the US and other major economies like Europe and Japan would certainly have some impact on the region.
“There is sign of slower slowdown in some parts of the world. The impact is there, the region is vulnerable but not like in 1997,” he said.
The 1997 Asian financial crisis was triggered in July 1997, starting with the baht devaluation in Thailand before spreading to other Southeast Asian countries, including Malaysia, Indonesia and the Philippines and finally hitting South Korea, Hong Kong and China.
The IMF arranged financial support packages for Thailand, Indonesia and South Korea to lift the countries out of the doldrums that saw hundreds of companies closing down, thousands of people losing jobs and years of slower growth.
Citrin said unlike in 1997, Asian countries have better fiscal policy now with stronger growth but the IMF was more concerned with the rising inflation.
He said the IMF would release its latest growth projection for 2008 in two weeks’ time that is likely to echo forecast made by the World Bank and Asian Development Bank (ADB).
“You will see certain downward revisions,” he added.
According to the World Bank forecast, the region will see reduction of one to two percent growth this year while ADB projected developing Asian economies to expand at 7.6 percent in 2008, compared 8.7 percent last year, the highest in almost two decades.