As a result, developments in Asia clearly add a considerable degree of uncertainty to the outlook, though around a forecast of slower growth and lower inflation than would otherwise have been the case. At this point, I expect, the direct effect of the shock from Asian developments on U.S. net exports would slow the growth in our GDP by roughly ½ percentage point.
The further multiplier effects, in this case, would yield an overall slowing in U.S. GDP in the range of ½ to ¾ percentage point. This estimate, as noted above, is subject to a considerable margin of error, given the evolving nature of developments in the region. But it does suggest that the spillover from Asia will importantly shape the U.S. outlook for 1998.