REPORT: STATE TO WEATHER ASIA ILLS.

Byline: Gregory J. Wilcox Daily News Staff Writer

Impacts of the Asian financial crisis are already washing ashore in California, but the state's economy is resilient enough to contain any potential damage, a study released Friday concluded.

With exports to 10 Asian countries falling, those troubled economies could prompt a dramatic slowdown in California by the end of this year or in early 1999, according to the analysis by the Milken Institute, based in Santa Monica. However, the study asserts that the diversity of the state's post-recession economy is such that it is able to absorb the blows coming from Asia.

``We've emerged stronger than before,'' said Ross DeVol, the report's author and the institute's director of research. ``And the world looks to California, especially Silicon Valley, as being the leader in technical innovation.''

As long as the state keeps coming up with new products and tools, there will be a demand for them, DeVol said. But if a worst-case scenario materializes, it could lead to a recession in Silicon Valley, which is highly dependent on technology exports to Asia, the report said.

``Trade is now becoming a drag on the economy, courtesy of the evolving Asian crisis,'' DeVol said.

He developed three scenarios for the state - consensus, optimistic and pessimistic - and said the most likely would be the consensus scenario, which is based on the July forecast from Consensus Economics, a survey of 100 economists who cover Asian countries.

It calls for more severe recessions in the countries bailed out by the International Monetary Fund and projects that the Japanese yen will further depreciate against the dollar.

Evidence of the Asian crisis can already been seen in employment numbers, DeVol said. Job growth in the state on an annual basis fell from 3.8 percent in January to 3.3 percent in June, the report said, with much of it attributed to the Asian crisis.

But Bruce Smith, an economist with the California Department of Finance, said the effects of Asia's economic turmoil are playing out just about as expected. He said the tone of the Milken Institute's report was a little harsh, especially in speculating about a recession in Silicon Valley, a region at full employment.

``I don't see that happening at this stage,'' he said. ``Silicon Valley won't fall into disarray because they lose some trade.''

Smith also noted that trade losses to Asia have been offset by gains in Canada, Mexico and Europe.

Meanwhile, California keeps churning out good economic numbers. The state reported Friday that unemployment fell to 5.8 percent, down from 6.2 percent a year ago. In Los Angeles County, the jobless rate fell to 6.1 percent from 6.6 percent in August 1997, and Orange County's jobless figure was 3.1 percent, down from 3.4 percent.