AN ANALYSIS OF CURRENT ACCOUNT BALANCES OF NON-OIL ASEAN COUNTRIES (SINGAPORE, THAILAND AND THE PHILIPPINES) IN 1970S

Abstract

The past decade was a turbulent era for most of the non-oil developing countries. Most of their current account position have experienced deficits throughout the 70s. The deficits could be due to several external and internal factors. The external factors include the slow growth in industrial countries, sharp increase in foreign real interest rate and declining terms of trade while the internal factors are deficit in fiscal account and appreciating real effective exchange rate. The purpose of this exercise is thus to investigate the extent to which each of these factors contributed to the deficits in the current account balance during the period 1970-82 with special reference to three non-oil ASEAN countries namely, the Philippines, Singapore and Thailand. Though the findings of the present study are broadly in line with previous studies, there are considerable variations across individual countries. For example, in case of Singapore, the variation of her current account balance over the 70s is mainly to the terms of trade and not to the other factors. On the other hand, in case of the Philippines and Thailand all these factors with the exception of growth in industrial countries are found to be significant in explaining their current account development.