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Asian crisis `need not hinder growth'

Thursday 11 September 1997 23:02 BST
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Manila - A new World Bank report claimed yesterday that the East Asian financial crisis would not hamper the region's record of strong growth as long as structural economic reforms were made, writes Stephen Vines.

Taking issue with some Asian leaders, primarily Malaysia's Prime Minister, Mahathir Mohamad, Stijn Claessens, the report's main author, said he did not think that international speculators and hedge fund managers were responsible for the turbulence in Asian currencies and stock markets.

"On the contrary," he said, "in some cases they have supported these currencies." He argued that the general pessimism about Asian markets was more than the fundamentals warranted, and said some fund managers were coming back.

Even so, the report gives plenty of grounds for pessimism. At the heart of the region's problems, it says, lies a mass of bad debt and low-grade lending by banks.

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