SINGAPORE. Apr 3: Asia’s growth will average 1 per cent this year, compared to a minus 8 per cent contraction in 1998, International Monetary Fund regional director Hubert Neiss was quoted as saying Saturday, reports AP.

South Korea’s recovery may be up to 2 per cent. Singapore newspapers quoted Hubert Neiss as telling a seminar of business writers.

Expansionary monetary and fiscal policies, bank and corporate debt restructuring "are beginning to have an effect." The Business Times quoted him as saying.

Inflation has been reduced sharply in Indonesia and constrained in Thailand and South Korea, the paper reported.

Exchange rates have recovered and stabilised despite lower interest rates, foreign exchange reserves have been rebuilt and access to international capital markets has been restored, the paper quoted Neiss as saying.

However. The Straits Times quoted Neiss as warning that

Asian recovery would be slow because growth in external demand would be moderate while bank and corporate restructuring would be protracted.

The Straits Times quoted Neiss as saying that while mergers and acquisitions have begun to take off in Asia, they have not gathered the momentum that would mean a serious restructuring of assets."

The most serious risk to Asian recovery is that countries may get tired of enforcing economic reform, the paper quoted him as saying. Otner dangers are a sluggish Japanese recovery and a possible reversal of the US economy.

Japan cannot be the sole Impetus for recovery, he was quoted as saying. Countries must help themselves by improving domestic demand for good and services.

"At the moment there is no danger of higher inflation because of the huge output gaps and little pressure on currencies." The Straits Times quoted Neiss as saying.