* Asia could see 1990s-style difficulties
* Protracted slump in exports to hit Asian economies hard
By Anirban Nag
SYDNEY, March 6 (Reuters) - Asia's industrialised countries may be confronted with a return to problems faced in the 1997/98 financial crisis unless demand for their exports in Europe and the United States improves, a senior World Bank economist said.
Most Asian economies entered the global crisis triggered by a downturn in the U.S. housing market with healthy currency reserves and current account surpluses, leading some economists to argue the continent could escape a downturn fairly unscathed.
But the recession has been much deeper than expected and exports have plunged in the past six months, with Japan, China, South Korea and Taiwan all reporting big falls. Exports account for about a third of Asia's gross domestic product and rely heavily on U.S. and European demand, which has been hard hit.
World Bank lead economist Andrew Burns said on Friday the trade slowdown had been most acute in East Asia.
"There are reasons to be concerned that countries in the region, notwithstanding their much stronger initial conditions, may run into difficulties," he said when asked if economies could face the same problems as in the 1997/98 Asian financial crisis.
"At the moment, we don't see that occurring.
"But ultimately the answer is how does trade respond over the next several months? If it continues to contract the way it has, then that could be a very difficult time for countries in the region, particularly some of the more industrialised countries."
LOANS RISING
Ten years ago, the then Tiger economies from Thailand to South Korea were hit by crisis resulting from persistent current account deficits, overvalued exchange rates, and dependence on short-term foreign capital and speculation in financial markets.
Many applied to the International Monetary Fund for a bailout and in 1997 the IMF offered $35 billion to rescue Indonesia, South Korea and Thailand, and later topped it up with an extra $77 billion in loans.
Burns said that as the present downturn intensifies and financial conditions deteriorate, a larger number of countries across the world would approach multilateral lenders such as the IMF and World Bank for funding.
Earlier this week, the World Bank approved $2 billion in contingency loans for Indonesia, which the government can draw upon should market conditions and access to credit worsen.
"Our lending in this fiscal year to June is already twice the pace it was in the previous year," said Burns, who expects loans to top $35 billion this financial year and $100 billion over the next three years.
He said the pace of contraction in the euro zone and the United States -- the two economic powerhouses on which demand for Asian exports depends -- would slow by the fourth-quarter.
"We expect negative growth in the eurozone this quarter, certainly possibly negative in the second quarter and as we move to the third and fourth quarter, making that transition out."
"The U.S. will follow a similar pattern. The stimulus packages aren't biting as yet. In the months to come, that money, will start flowing. It will start supporting demand and will have both immediate and long term effects," he added. (Editing by Jan Dahinten)