Policymakers across the region are rightly concerned about the potential consequences of a debt crisis in the US. We believe that the impact on Emerging Asia’s economies of a one or two notch downgrade of US debt by the main debt-rating agencies is likely to be small. However, the implications of a default and a big downgrade that pushes the US into recession would be much more severe. The economies likely be worst hit are those which are most open to international trade such as Hong Kong and Singapore.