The survey, brought out by the United Nations Department of Economic and Social Affairs, is upbeat on South Asia economies though it expresses alarm at the situation in East Asia. It notes that South Asia is relatively unscathed by the fallout of the Asian financial crisis and that growth was moderated in 1997 for other reasons.

The survey qualifies its contention by pointing out that "the main impact of the East Asian crisis on South Asia in 1998 is expected to be increased competition from labour-intensive exports of East Asian countries which have sharply depreciated currencies, and, in Bangladesh, lower remittances of overseas workers".

Noting the lower growth rate in India in recent years, the report contends that economic growth is expected to be maintainedat a rate of 5.5 per cent in 1998 and agricultural production will be "subdued". However, political uncertainty has been reduced and business confidence improved with the affirmation of the new Indian government about continuing the liberalisation process.

"There could be some strengthening of external demand in 1998 which would provide a certain inducement to private investment," the report maintains about India. The depreciation of the currency in late 1997 is expected to result in some improvement in export demand. "Its magnitude however will be limited by a slowdown in world demand, higher prices of imported inputs and depreciations in competitor countries in East Asia," the UN report maintains.

In Pakistan, the report predicts "some improvement in economic growth" this year with output rising to four per cent from 3.4 per cent last year. Supply side measures should benefit the industrial sector and a more stable political environment and financial backing from the International Monetary Fund (IMF)should boost business confidence, the report contends.

However, Pakistan's economy "suffers from serious structural problems on fiscal and trade fronts", the report warns. The fiscal deficit was expected to remain a high six per cent of the gross domestic product (GDP) this year, monetary policy would remain restrictive in order to hold down inflation and inflation was expected to average just under 10 per cent. Despite the Pakistan rupee devaluation in late 1997, the increase in exports -- as is the case with India -- will be limited by slower world trade growth this year and intensified competition from other Asian countries in textile products.

Bangladesh's economic growth will moderate slightly to about five per cent this year from close to six per cent last year, though industrial activity will continue to be supported by increased foreign investment in the power and oil sectors.

Noting robust export growth driven by a surge in garment sales for Bangladesh, the report warned that thestrengthening in exports will be limited this year by massive currency depreciations of major Asian competitors. Meanwhile, remittances from overseas workers was likely to reduce because of sharply deteriorating employment conditions in East Asia. Meanwhile, import growth was likely to pick up because of higher imports of capital goods for oil and gas exploration, leading to some widening in the current account deficit, the report predicts.