Throughout 1983 and '84, the U.S. was the churning locomotive of the world economy. But when that engine of growth sputtered and slowed this year, many of the trading partners it was pulling along practically lurched off the track. The jolt was particularly rough on the export-driven economies of the Pacific Basin. In Taiwan, which depends on the American market to absorb nearly half its exports, growth in the production of goods and services, adjusted for inflation, has fallen from 10.9% in 1984 to a projected 4.2% this year. Over the same period, Singapore's rate of expansion has dropped from 8.2% to an estimated .5%. All around East Asia, the world's most dynamic economies have suddenly lost much of their steam.
Will the slowdown continue? That was the main question taken up at a meeting of TIME's Pacific Board of Economists in Hong Kong. In their annual forecast, the economists agreed that East Asia would spend another year in the doldrums. Though the board members expect a slight acceleration of growth rates in South Korea, Taiwan and Singapore, they foresee further declines in Japan, Hong Kong, Malaysia, Thailand and New Zealand. Said Edward Chen, a board member and director of the Center of Asian Studies at the University of Hong Kong: "I do not see a very bright picture for 1986." Only China, where capitalist-style reforms have helped drive growth to an estimated 12% this year, is expected to expand at a very rapid clip.
Asia can count on little help from the U.S. next year. Board Member Lawrence Krause, a senior fellow at the Brookings Institution in Washington, noted that America's exploding foreign debt, which is now approaching $100 billion, is unsustainable. It will put limits on what the U.S. can afford to buy from abroad.
Another factor that will restrain U.S. imports is the falling value of the dollar. Since early March, it has dropped 17% against an average of other major currencies. The finance ministers of the so-called Group of Five--the U.S., Japan, West Germany, France and Britain--announced in September a coordinated effort to bring down the rate of the dollar. A cheaper currency will make imports more expensive for Americans and thus help the U.S. cut its $150 billion annual trade deficit. But it will also inflict further dam age on Asia's export industries.
If the dollar does not stay down, American industries will keep pushing hard to raise import barriers. Last week the U.S. Senate approved a measure similar to one already passed by the House of Representatives that would curb textile and apparel shipments from a dozen exporters, including South Korea and Hong Kong. In addition, the U.S. International Trade Commission issued a preliminary ruling that low-priced Japanese products were hurting the American semiconductor industry. That could lead to import restrictions on computer chips.
Such threats frighten the East Asian nations, which have come to rely upon the U.S. as a benevolent trading partner. Said Narongchai Akrasanee, managing director of Thailand's Industrial Management Co.: "Our big brother, the U.S., is threatening to declare a trade war with the rest of the family." Complained Suh Sang Mok, vice president of the Korea Development Institute: "A lot of people in South Korea feel that it is being picked out as a sacrificial lamb."