GROWTH WITHIN ASIA PACIFIC REGION SET TO SLOW, SAYS ECONOMIST

KUALA LUMPUR, Oct 29 (Bernama) -- Growth in the Asia Pacific is set to slow
with the next 12 months being some of the toughest in years, with growth coming
in at a five- or 10-year low, according to an economist.

Countries in the region which have come to rely on China to propel their
economies will also see a decline in their growth rates, said Daniel Melser,
senior economist at the Moody's Economy.com office in Sydney.

In his report entitled "Asia-Pacific Outlook: An Indirect Hit from Credit
Crisis", Melser said China will post growth of around nine percent over the next
few years compared with 11.9 percent in 2007.

On the bright side, Asia-Pacific countries are likely to fare better than
the United States or Europe, where the odds of a deep downturn, perhaps the
worst in 10 or 20 years, are shortening every day, he said.

The Asia Pacific has escaped relatively unscathed from the financial
effects of the credit crisis, but the region will not remain immune from its
economic crisis, Melser said.

Along with equity markets in the rest of the world, the regional share
markets and currencies have taken a pounding in recent weeks, he said.

"The decline does not reflect financial woes -- the region has suffered
only modest write-downs of assets -- as much as expectations of a weaker global
economy," he added.

According to Melser, the greatest risk to Asia is not a financial crisis
but an economic slowdown, considering that exports are such a major contributor
to regional output.

"The absence of sizeable write-downs meant that the region's financial
institutions have not come under the same pressure as those in much of the rest
of the world. Asia has yet to see a bank failure, or a bailout, related to the
US credit crisis," he said.

But it has not been all plain sailing, Melser said.

Despite robust balance sheets, financial institutions in some economies
have struggled in the face of a global liquidity shortage, he said.

"This has placed some pressure on those seeking fresh funds or wishing to
roll over existing funding. However, these liqudity problems have proved
manageable," he added.

Melser said reduced liquidity has created difficulties in some parts of the
Asia-Pacific, though these have been modest given that most countries run
current account surpluses, with the notable exceptions being Australia, New
Zealand and India.

"Those countries with surpluses -- which export rather than import savings
-- have been relatively insulated from developments in global financial markets,
as overseas borrowings has been minimal," he said.
-- BERNAMA