Originally created 02/07/98

Asian market troubles unlikely to threaten Augusta



The financial stability of many Asian countries is in question since turmoil hit their markets in the summer. But local business experts remain optimistic that economic troubles abroad will have little effect on the economy here.

"While (the monetary crisis) is not very large in terms of the world market, it's the start of something and some people may express some concern over that," says Tim Maund, executive director of the CSRA Regional Development Center.

But unless the economic turmoil in Asia lasts more than a year, Mr. Maund is cautiously optimistic that the metro Augusta area will continue to recover from its mild recession.

James Don Edwards, professor and interim dean of the University of Georgia's Terry College of Business, forecasts an employment expansion of 1.6 percent, a gain of 3,100 jobs for the Augusta area in 1998.

He delivered his forecast during the annual University of Georgia Economic Outlook last month at Radisson Riverfront Hotel Augusta.

The lingering effects of cutbacks at the Savannah River Site and in the apparel and textile industry are holding back the area's economy along with slowed growth in health care, he said. But investments in other industries are gradually compensating.

Assuming the financial crisis in Asia is contained to that part of the world, Dr. Edwards predicted Georgia's economic growth will continue, but at a slower rate. Gross state product will increase at 3.1 percent in 1998, down from 3.6 percent in 1997 -- but still higher than the nation's gross domestic product growth, which is forecast to be 2.3 percent.

The turmoil in Asia is not likely to derail Hankook Synthetics' plans to build a $1.2 billion polyester plant in south Richmond County, Dr. Edwards and other experts said.

Representatives from the South Korean-based corporation have said the company intends to move ahead despite Korea's financial woes and recent $57 billion loan from the International Monetary Fund.

Estimates indicate the Hankook factory will employ 500 people when it opens in January 2000 and 1,300 more by 2010.

"Anytime you have manufacturing facilities that are dependent on that part of the world, it might affect you a little, but it should not affect us that much," said Jeff Sanford, Augusta-area director of the University of Georgia's Business Outreach Services/Small Business Development Center.

Elliot Price, regional manager of the Georgia Institute of Technology's Economic Development Institute, said he believes Hankook's plans to build a plant in Georgia could be a positive move for the company considering the economic instability in Asia.

In Georgia, a plant would be less susceptible to market shocks, he said.

Besides, said Charles DeVaney, executive vice president of Augusta Tomorrow, construction for the proposed Hankook plant will be financed by American banks.

He dismisses gloom-and-doom forecasts.

"I don't see it affecting our area as much as some people think," said Mr. DeVaney, a former mayor of Augusta. "There is no indication of it affecting us."

But what if the financial crisis is not isolated to Asia and spreads?

That is unlikely, Mr. DeVaney said.

But if the Hankook plant isn't built, it could be more a psychological blow to the area's economy than a financial one, he said. "It's hard to miss what you don't have."