The textile and clothing industries of South East Asia and South Korea are unlikely to recover from the Asian crisis before 2005, according to recent forecasts by Textiles Intelligence.

In the six Asian countries most affected by the crisis -- Indonesia, Malaysia, South Korea, the Philippines, Thailand and Singapore -- textile production (as measured by mill fibre consumption) will reach only 3.54 million tons next year, says Textiles Intelligence, compared with 4.46 million tons in 1995. And it will take another five years after that before 1995 levels are restored.

These are among the findings of "Textile and Clothing Consumption in Six Asian Countries: Forecasts to 2005", published in the latest issue of Textile Outlook International -- a bimonthly business strategy report from Textiles Intelligence.

Combined net exports from the six Asian countries will fall from 2.13 million tons in 1995 to 1.45 million tons by 2000, and will only partially recover to 2.00 million tons by 2005. As a result, the share of these six countries in total net imports by the advanced economies will decline from 30% in 1995 to a mere 17% by 2005.

In the worst hit country, Indonesia, many firms have been forced into bankruptcy as income levels and domestic demand have fallen. And those producers which have survived the crisis face difficult years ahead.

Before the Asian crisis, Indonesia's textile industry was achieving spectacular growth. Output grew by almost 250% over the ten years to 1995, reaching 1.3 million tons. Exports climbed to the point where they represented more than 10% of total net imports into developed countries.

But -- in the wake of an 80% currency depreciation -- the costs of dollar loan repayments and raw materials in Indonesia have soared, and production and exports have been severely disrupted. Although the devaluation has enabled many Indonesian firms to reduce their export prices, the country's textile industry will be doing well if it manages to achieve the same export volumes in 2005 as it did ten years earlier.

The Asian crisis has also hit Indonesia's domestic demand. If the crisis had not occurred, textile and clothing consumption in Indonesia could have reached a substantial 3.5 kg per head by 2000 and 4.0 kg per head by 2005. But the report now predicts a sharp decline from 2.9 kg in 1995 to 2.5 kg by 2000, and then a partial recovery, to just 2.8 kg per head, by 2005.

In Thailand, which suffered a 34% devaluation, companies that have survived the crisis face similar difficulties. Textile production is forecast to fall from 874,000 tons in 1995 to 636,000 tons in 2000, although a recovery to 898,000 tons is predicted for 2005.

The prospects for South Korea, on the other hand, are less favourable. Here textile production is forecast to fall to 1.56 million tons next year compared with 1.83 million tons in 1995. And the next five years will see only a partial recovery, to 1.76 million tons.

In Western countries, the impact of the Asian crisis has not been as bad as many producers had feared. Indeed, in the short term, European and US firms could even benefit from the crisis and its aftermath. With regional demand continuing to be sluggish, Asia has a surplus of raw materials and semi-processed textiles available for export. Furthermore, thanks to weak demand and the wave of currency depreciations, many of these materials are being offered for export at low prices.

Some producers in Western countries are using this opportunity in an attempt to lower their cost base and recapture some of the market share which they have lost to imports in recent years.

On the other hand, Asian overcapacity and falling prices have resulted in a further intensification of international competition. This will make it even harder for non-Asian companies around the world to compete over the next five years.