The outlook for security and stability in the Asia-Pacific is more promising at the end of 1996 than it was at the beginning of the year, principally because U.S.-China relations are better, even though warier. There are several underlying security problems in the Asia-Pacific, including the Taiwan issue, but the major powers have a strong stake in the maintenance of peace and stability. Therefore, barring uncertainties on the Korean peninsula, adverse developments of a kind which could undermine the economic dynamism of the region are unlikely, at least in the near future.

The economic slowdowns in some countries of Southeast Asia do not change the underlying economic dynamism. No significant adverse political developments are expected within the countries of Southeast Asia in 1997–98, though the situation in Indonesia seems more uncertain.

In this issue of Regional Outlook we have a separate introductory section called The Asia-Pacific Context. The peace and prosperity of Southeast Asia are intertwined in many ways with the broader Asia-Pacific region and a brief assessment of this broader region, especially of the potential conflict areas, is necessary. We have also included in this section two comments on Hong Kong's transition to Chinese rule in 1997. Following this, Southeast Asia is dealt with in two parts, Political Outlook and Economic Outlook. Each part is in turn divided into two sections, first the ASEAN Six (Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand) and then Indochina and Myanmar.

Different authors have contributed to this volume and we would like to thank them for their contributions. We would also like to thank Mr Christopher Lee and Dr Mya Than for compiling the basic indicators of the Southeast Asian economies in the appendices. These have been obtained from various published sources and are included merely as background data that readers may find useful.