I was hoping for better performance out of Thailand and the Asian economies as a whole than we have seen. Time has come for not only Thailand but also the Asian Tiger to rumble. If the European and Japanese kittens aren’t going to provide leadership in the global business economy then the Asian economies need to sober up, finish eliminating corruption and mismanagement, and reward strong business managers and public servants.
Assuming mismanagement and corruption are not an issue (which it is, and this will always be a struggle in economies that embrace capitalism), then global economies have two key choices. They can be protectionist or they can be focused on generating optimum economic activity and be open to trade.
Thailand went through major currency devaluation in July 1997, and as the U.S. rice producers’ No. 1 rice export competitor, Thailand’s devaluation, though tremendously damaging to their own economy, had multiplier effects in the region and significantly reduced our ability to compete in export markets.
A weak global economy, favorable global weather, and large stocks in export countries have pushed 2002/03-world rice acreage to its lowest level since 1993/94. In 1999, world rice acreage was at a record 155 million hectares, but, since 1999, world rice acreage has declined 5.5 percent.
World rice production at 380.9 million metric tons has declined 6.9 percent from the 1999 record of 409.3 million metric tons and is at its lowest level since 1996 and for the past two years global rice consumption has exceeded production.
World rice ending stocks are at a 15-year low at 105.1 million metric tons. In 2000, world rice ending stocks were at a record 145.3 million metric tons, down 40.2 million metric tons since the 2000 high or 28 percent.
Current world rice stocks as a percent of consumption is the lowest since 1983/84, and global capitalism has had a favorable impact on global trade. For 2002/03, global trade is estimated at 25.7 million metric tons, second only to the 1997/98 record of 27.6 million tons.
So the stage is set for improving export prices; that’s the good news. The bad news is that these Asian economies’ return to a healthy robustness needs to be accelerated. Latin American is a story that we will leave for another day.
The cover story of the September issue of Global Finance was “The Tiger Wakes Up: How Far Has Asia’s Recovery Come?” The article makes a number of points.
“These economies are still tigers with the necessary attributes for healthy growth,” says Tim Condon, ING’s chief economist for Asia. “You just need to drop the ‘roaring.’”
“Five years ago, growth in these countries was unbalanced and out of control, says Ajay Kapur, head of Salomon Smith Barney’s Asian regional strategy research in Hong Kong. “Now you have strong and steady growth, low inflation and government balance sheets that are in okay shape. This is a substantial achievement.”
“There has been a silent change in policy by government across the region,” says CLSA’s Walker. “Interest rates are now at a generation low. There has been a huge turnaround, and we are beginning to see saving rates dropping and domestic consumption rising.”
The time has come for the Asian Tiger to rumble. The time has come for the Asian Tiger to start shouldering the burden of economic prosperity. The time has passed for U.S. policy to accept Asian and Latin American countries dumping agricultural and manufactured commodities and products into export markets without demonstrating a resolve to achieve a timely return to robust economic activity in their own countries.
Bobby Coats is an Extension agricultural economist and farm policy specialist with the University of Arkansas. e-mail: [email protected].