For example, in Indonesia GDP fell by just over 13 percent in 1998. The difference in the mean output gap between 1997 and 1998 was 19 percent. Fragmentary evidence suggests that in some sectors, capacity utilization rates in manufacturing fell below 50 percent. The figures show that output contraction bottomed out in 1998 and the recovery started in the first half of 1999. Our projections suggest that, perhaps with the exception of the Philippines, this trend will continue through the remainder of the year.
Recovery is projected to be strongest in Malaysia and Thailand, and modest in Indonesia.
The available data do not allow projections through to the end of fourth quarter. Looking ahead, the projections suggest the following. However, since the underlying trend increases by about 6 percent on an annual basis, this is consistent with actual GDP growth of between 2 to 3 percent in 1999. For Malaysia, the projections suggest that the output gap for industry will be slightly lower in 1999 than it was in 1998. When the trend growth of about 10 percent is allowed for, the observed industrial growth could be about 10-11 percent in 1999.