There are, however, some good signs. The ex ports of Asian countries are beginning to re cover, and the business sentiment and earnings of Japanese companies in those countries, espe cially export- oriented enterprises, are showing signs of picking up. If the Asian economy moves toward an export-led recovery, this development would also be a factor in propping up the Japa nese economy through an increase of exports to Asia. Regarding the domestic economies in the Asian countries, while there are moves to eliminate ex cessive government intervention, there are also moves to carry out reforms in the direction of fur ther consolidating their market economy sys tems, including financial system reforms. Re garding capi tal transactions, however, there are differ ences in the responses of South Korea and Thai land, which are seeking to deregulate, and Ma laysia, which is moving to tighten regu lations.
Further discussion is necessary on the issue of capital transfer regulations.
Whatever the case, if the re covery led by external demand continues and or derly capital inflows to the Asian countries are resumed, it will lead to an expansion of domestic demand, and the econo mies of Asian countries will hopefully move toward recovery. In that case, hopefully the Japanese and Asian sides could form a mutually beneficial cycle, in which the re covery of Japan s economy would contribute to the re covery of the Asian economy and vice versa. Japan is expected to play a role especially through the expansion of imports following do mestic eco nomic recovery, the supply of funds for financial stability in the Asian countries, and human re sources development via technical co operation. The IMF is now acting in Southeast Asia and Korea in much the same way as it did in Eastern Europe and the former Soviet Union - insisting on fundamental changes in eco nomic and institutional structures as a condition for receiving IMF funds. As a con clusion, Feldstein asserted that the IMF should work with countries that have not yet reached a currency crisis in order to prevent the larger cur rent account deficits or the excess short-term debts that could later precipi tate a crisis.