Credit Suisse is forecasting Asian economic growth will dip in 2008, on the back of a US-led slowdown.
The Asia excluding-Japan sector is expected to post 8.3% growth in 2008, compared to the 8.4% forecasted for this year.
Credit Suisse anticipates China, India and Vietnam will lead the way in growth, but says rising inflation remains a concern in these markets.
As credit is not widely held among Asian consumers, Credit Suisse says the continent’s currencies and equities are still ahead or level on the year.
Credit Suisse’s Asia ex-Japan chief regional economist Dong Tao says the area’s weighted growth average for 2007 has been revised down to 8.4% from 8.6% in the firm’s latest emerging markets quarterly report.
"The malaise in the U.S. housing sector is expected to trigger a global slowdown, and Asia's exports will be affected,” he says.
“But, in our view, economic fundamentals in Asia ex-Japan remain solid and regional markets should weather the growth down-cycle."
Tao says China’s inflation outlook continues to deteriorate, hitting 6.5% in August, the highest level since December 1996.
He says the bank has lowered China’s GDP growth forecast in 2007 to 11% from 11.5%.
In Hong Kong, Credit Suisse says strong economic momentum and robust employment conditions have created inflationary pressure.
Tao says the recent spikes in the Hong Kong Interbank Offered Rate may push up mortgage rates, but he remains optimistic about asset appreciation in the province.
The strongest rate of growth is expected in Vietnam, with a forecasted 9.2% increase for 2008, compared to 8.8% this year.
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