Asia's slowdown should not be feared (Aug 10)

Economic growth across Emerging Asia eased in Q2 and in July, as the global upswing lost momentum and domestic policies tightened. Nevertheless, private sector domestic demand is well placed to cushion the slowdown. Moreover, overheating worries should diminish and most expansions should settle at a still relatively rapid pace which can be sustained. Only Taiwan looks at risk of suffering a serious slowdown. Inflation is also peaking given good harvests and strong local currencies. Policy rates will move up further but the tightening to come need not be draconian. We continue to expect that regional currencies and Emerging Asia equity markets will climb further.