Four major developments could significantly affect the world economy over the next one to three years. All stem to some extent from the current Asian crisis although all but the first have independent causes as well.
Japan accounts for about two thirds of the entire Asian economy.
It is already in recession and is likely to experience zero or negative growth in 1998. Despite the government's recent initiatives, there seems to be little chance that sufficient policy changes will be adopted either to restore stability to the banking system, and thus an effectively functioning credit market, or to convert the country's restrictive fiscal policy into the needed stimulus. 1 Korea is the third largest economy in Asia. The one major exception is China, where growth should remain solidly positive. Taiwan and Hong Kong are likely to continue expanding as well.