The Asian economic crisis is causing serious distresses for American workers, exporters and investors. America’s robust economy is not as rosy a picture as most believe since our economy is strongly linked to an unstable global economy. This instability is fueled by the prolonged Asian crisis. The International Monetary Fund is pumping an estimated $118 billion into Asia now, but it’s not enough. The United States filled its quota of $38 billion which accounts for 18 percent of total quotas from 182 member countries. But filling the quota is not enough. President Clinton is asking Congress for $18 billion more. The Senate approved the request but the House Appropriations Committee argues that IMF’s programs and policies need reforming and that quotas are not in balance. Reform might be needed, but a forever-widening trade deficit between the United States and the Asian region takes priority.
As House members clamor for new IMF policy revisions, it certainly must be aware of how crucial Asian economies are to American investors, businesses and exporters. The global economy works holistically, and IMF’s rescue packages promote global economic stability and enable countries that are markets for U.S. exports to recover from financial crises. Additional funding is crucial for foreign and American exporters. The Asian region gets nearly 22 percent of all American exports. This is $200 billion worth of goods and services. A lot of jobs are involved. Minnesota is particularly dependent on exports to Asia. In 1996, The Minnesota Department of Trade and Economic Development announced for the first time that Asia accounts for 34.7 percent of total Minnesota exports. The European Union only gets 26.2 percent.
Many critics believed Japan would be the savior of the region. But Japan is suffering a recession all its own, largely attributed to bad bank loans. Just last week, Prime Minister Ryutaro Hashimoto was forced to resign because of his failed economic packages. Following this, many analysts of Japanese politics are pessimistic about a new administration’s ability to do much better, although this remains speculative at best.
The IMF has been surveying and stabilizing international monetary systems since 1944. Recently, IMF was responsible for bailing out Thailand, South Korea and Indonesia. However, U.S. exports to these regions continue to plummet. If IMF is to continue its efforts, it needs more support from all its members. The additional request for $18 billion is an investment, not a handout. The trade deficit between the United States and Asia is widening. The Commerce Department has quoted a figure of $15.75 billion in trade imbalance. Last May marked the fourth straight monthly record. Sales of American-made cars fell by $488 million. Communications dropped $275 million and the demand for computer chips decreased by $133 million.
Some economists are saying America’s economic growth is already showing signs of slowing down. Harsher critics even fear an outright recession. The Asian turmoil is taking a huge toll on U.S. growth, and Congress needs to respond to IMF’s needs in doing everything possible to turn the Asian crisis around.