Over the next few years, robust growth in Asia years should cushion the global economy in case of a slowdown in the U.S., the Economist Intelligence Unit (EIU) analysts said Sept. 11. "The chances of a U.S. recession are growing but Asia's economies should provide the cushion needed for the global economy," said Graeme Maxton, a director of the EIU's Corporate Network, a membership-based briefing service for senior executives.
The EIU expects U.S. economic growth to slow sharply to 2.2% in 2007 from 3.3% this year due to a weaker housing market, higher interest rates and surging oil prices. The U.S. economy should rebound and expand 2.9% in 2008, with 3% in both 2009 and 2010, the EIU said.
While the U.S. slowdown will affect Asia, the damage "will not be too serious" unless there is a recession or a dramatic drop in the value of the U.S. dollar, it said. Although economic growth in Asia will slow next year, the region will remain the most dynamic in the world," it said.
In China, where the government is trying to manage the pace of expansion, the economy is forecast to slow from an estimated 10.7% this year to 9.8% in 2007 and 9.3% in 2008, the EIU said. Japan's economy is forecast to expand 2.8% this year, 2.1% in 2007, and 1.5% in 2008-2010. Hong Kong's growth should fall from 5.9% this year to 4.5% by 2010 while economic expansion in Singapore is predicted to fall from 7.3% this year to 4.7% in 2010.
In India, real GDP growth, adjusted for inflation, is forecast to slow from 7.6% this year to 6.9% by 2010, EIU said.
Copyright Agence France-Presse, 2006