Y2K stockpiling boosting Asia's recovery

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Y2K stockpiling boosting Asia's recovery

Bloomberg

Thursday, September 2, 1999

Asia's economic recovery may have been accelerated by the stockpiling of goods in preparation for possible widespread computer system failures on Jan. 1, 2000, said an information technology expert.

Concerned about the potential fallout from the millennium bug, which causes some computers to misread the year 2000 as 1900, some companies are shifting their purchasing for next year to this year, creating a ``speed bump'' effect in Asian economies, said Joe Sweeney, head of research at the Gartner Group Asia, an information technology advisory firm.

``On a macro-level, what we see happening is a huge chunk of the economy -- maybe as much as 15-20 percent -- moving forward, causing a large spike,'' Sweeney told the Bloomberg Forum. ``What happens after Y2K? That pattern reverses and becomes a deep trough. How deep that trough is, we don't know yet.''

The trend raises questions about the sustainability of Asia's nascent recovery from recession, said Sweeney, as it may have exaggerated this year's region-wide rise in exports and raw material orders.

There's evidence of the phenomenon at shipping and trading companies, who say they're seeing ``surprising data,'' or a surge in requests for moving goods that goes beyond what would be expected in the economic rebound, he said. Companies are stockpiling basic goods such as glass jars and rushing to reserve freezer space to make sure their businesses aren't disrupted.

Economies in South Korea, Singapore and Thailand all returned to growth earlier this year, with a pickup in trade helping to fuel a rebound that was faster than economists expected. Asia's climb out of recession has also been helped by a robust U.S. economy hungry for imported goods, government spending on infrastructure projects and lower interest rates.

Still, hoarding of goods is happening even though few companies are willing to talk openly about it, he said. It's evident in the U.S. and Europe as well as Asia.

``It's become a competitive issue for them,'' said Sweeney, especially if companies are struggling to purchase the same supplies.

When the trend reverses next year and companies reduce inventories again, the slump may deal a blow to many of the region's smaller enterprises.

``Many of them are very excited by the so-called recovery they're seeing,'' he said. ``If we do see the downturn next year, that means these factories are going to have to wind back considerably -- that could mean layoffs, retrenchments.''

Similarly, the stockpiling ahead of Y2K may be masking weakness in the U.S. economy, said Sweeney. While it's likely not the main driver of the world's biggest economy, increased orders ahead of Jan. 1 may be one factor helping to power growth.

http://www.businesstoday.com/techpages/y2kstockpile09021999.htm

-- Gayla (privacy@please.com), September 02, 1999

Answers

Wonder if they have Skoal, ammo, pick-ups, and a church to cower in... (quote compliments of Billy Jeff)

-- Gia (laureltree7@hotmail.com), September 03, 1999.

*+++++Still, hoarding of goods is happening even though few companies are willing to talk openly about it, he said. It's evident in the U.S. and Europe as well as Asia. +++++++

There they call it inventory management.......

-- justme (justme@justme.net), September 03, 1999.


If nothing happens, it will be bad for Asia because people will be using their stockpile and supplies for months. If something happens, people will use their stockpiles and who knows what shape Asia will be in. But for now, they can laugh all the way to the bank

-- bardou (bardou@baloney.com), September 03, 1999.

My question to all the "experts" is this:
If the J.I.T. distribution systems start breaking down, how will the Asians get anything over here anyways? What will take priority, finished goods or raw materials? Who will dicate that? Who will be in charge of prioritizing transportation resources? Sounds like the making of a major FUBAR to me.
Got Cigarettes? better than gold....
John

-- John Galt (jgaltfla@hotmail.com), September 03, 1999.

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