IMF: Southeast Asia may face biggest impact from US slowdown

A recession in the United States, anticipated by some economists as a result of a current housing slump and related credit crunch, will obviously lead to a cutback in exports by Asia's rapidly-growing economies, led by China.

Based on a "rough rule of thumb," for about a one percentage point decline in US economic growth, there could be a "half to a full percent decline in Asian growth, depending upon what the effects are beyond the United States," said Steven Dunaway, deputy director of the International Monetary Fund's Asia and Pacific department.

"There will be much more of an impact in Southeast Asia," which faces direct competition from China in terms of a number of export products, he said.

"Those (Southeast Asian) countries will all face a much tougher time with the slowdown in the United States and probably some extra competition from China," he said at a forum on the Chinese economy at the Woodrow Wilson International Centre for Scholars in Washington.

Dunaway said Asia's exporting nations were "going to be competing for a piece of a smaller pie" if US imports shrunk.

He raised the possibility of China slashing prices to remain competitive.

"If the Chinese themselves face a more difficult environment, there will be some tendency probably at least to hold prices if not cut prices," he said. - DDNEWS