Asia is capable of weathering the fallout from a US slowdown as the region's export dependence on the world's largest economy has waned, US investment bank Merrill Lynch says.
With the global economy also likely to withstand slower US growth better than expected, this augurs well for the region's export-led growth engines, it said in a report for next year yesterday.
"If the global economy holds up as we expect, the slowdown in Asian export growth should be mild in 2007," Merrill Lynch said.
According to Merrill Lynch, the US share of Asian shipments has declined steadily in recent years, accounting for 16.5 percent last year compared with a peak of 25.5 percent in 1999.
Eighteen percent of Asian exports now go to China, 15 percent to Europe and 10 percent to Japan.
"One factor driving the world's increased independence from the US, in our view, is the recent evidence that the global investment cycle is poised to remain strong," it said.
The US economy is widely projected to slow next year in what analysts describe as a "soft landing."
For next year, global growth excluding the US is projected to slow to 5.3 percent from this year's 5.8 percent as the US economy weakens to 1.7 percent from 3.2 percent, Merrill Lynch said.
"Our key global macro call remains intact; despite a significant slowdown in US growth, we still expect the global economy to weather the US storm better than expected," it said.
Part of Asia's resilience stems from the openness of the region's economies. That means continued robust growth in Europe and Japan will offset the likely housing-driven US slowdown, Merrill Lynch said.
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