The closure of factories and the loss of jobs as a result of the crisis will make it all the more difficult for economies to grow again quickly. Many countries will also need to rebuild damaged banking systems. This will come at a high price and it will take considerable time. Indeed we have already seen a credit squeeze in some countries. The outlook for the major regional economies looks clouded at best.
Japan is likely to remain in the economic doldrums for some time yet.
Despite the substantial stimulation packages already announced by the Japanese Government, the economy will continue to be plagued by severe financial sector problems and, as you would know, low consumer confidence. The IMF has estimated that the Japanese economy contracted by 2.8 percent in 1998 and expects a further contraction of 0.5 percent this year. Japan's economic planning agency has itself said that the economy could well contract for a third consecutive year. China, which has so far appeared to resist the worst of the onslaught of the regional crisis, has also begun to suffer from its effects. Its export growth flattened out to around zero over 1998, and the collapse of a number of international trust and investment corporations may have repercussions for China's ability to continue to attract high levels of foreign investment.