Southeast Asia may face biggest impact from US slowdown: IMF

WASHINGTON, Jan 22, 2008 (AFP) – Southeast Asia will face stiffer export competition from China and likely bear the brunt of any impact in Asia from a major economic slowdown in the United States, an IMF official said Tuesday. But Beijing would probably raise government spending, particularly on infrastructure investment, to keep the economy chugging along at a growth rate of nine to 10 percent, he added. 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 probab