The recent economic slowdown in some ASEAN countries has been accompanied by inflationary pressures and current account deficits. This raised questions about the ability of these economies to sustain growth and competitiveness. Questions were of the type: Can the cubs grow up to be tigers? Nevertheless, the slow-down that had prompted such questions still supported growth rates much higher than those of many other countries. The most attention was given to the falls in growth in Thailand, Singapore and Malaysia; the first two economies are expected to register growth of only (!) 7.0 and 7.7% respectively in 1996 (Table 1). The Malaysian slow-down is also significant but it may be considered more of a soft landing, because the 1996 GDP growth was still expected to be a relatively high 8.2% — in fact, this relatively slower growth was welcomed for its effect of relieving labour and resource shortages. In the case of Indonesia, although the estimated GDP growth rate of 7.6% was slightly lower than that of 1995 it was still higher than that of the 1992–94 period. The rest of the ASEAN economies, Vietnam, the Philippines and Brunei, performed reasonably well, each recording an upward trend in its GDP growth.

Even these lower growth rates, by themselves, would be regarded as excellent if they took place in virtually any other country, whether developed or not. Yet, in ASEAN they have been received with trepidation. Some of the reasons for this reaction are the exceptional growth rates in the past eight years 1 and the growth targets and economic agendas set by ASEAN countries; only with high growth, sustained over a long period will they achieve the transformation into developed economies. Malaysia, for example, has a target to be an industrialized country by the year 2020 while the leaders of Thailand and Indonesia have also made similar pronouncements. What this implies for the Malaysian strategy, as stated by the government, is that high Gross Domestic Product (GDP) growth of at least 7% per annum has to be sustained for quite a long period of time.