Europe Crisis Poses ‘Severe’ Risk to Asia: IMF

[jdme]

Europe Crisis Poses

An escalation in Europe’s debt crisis may trigger a selloff in Asian assets, force foreign banks to cut lending to the region and disrupt its currency markets, the International Monetary Fund said.

Asia’s growth has slowed since the second quarter of 2011, the fund said in a report today, cutting its forecast for this year’s expansion to 6.3 percent from an April estimate of 6.8 percent. Inflationary pressures across the region are still “elevated” and financial conditions remain accommodative in most of Asia, the IMF said.

“An escalation of euro area financial turbulence and a renewed slowdown in the U.S. could have severe macroeconomic and financial spillovers to Asia,” it said. “Since 2009, investors from advanced economies have built up substantial positions in Asian markets. A sudden liquidation of these positions could trigger a loss of confidence, and contagion could spread from bond and equity markets to currency and other markets.”

 

[Alchemy]

In today's globalized world Asian countries too would surely take a hit if Euro or USD takes a hit , hope EU recovers at the earliest !

 

[jdme]

I think we are heading for prolonged global slowdown. Western democracies are suffering from legacy crisis and without them, it won't be easy for developing nations in Asia/Africa/SA to maintain high growth. Depression leads to further depression.