Risks to growth still skewed to the downside

Almost all countries in emerging Asia have now released their Q4 GDP figures. Growth slowed across most of the region, mainly due to weakness in external demand. The recent improvement in the US, a pick-up in Asia’s PMIs, and the easing of supply-chain disruptions stemming from Thailand’s floods suggest that Asia will fare better in Q1. Nonetheless, we believe that risks for 2012 are still skewed to the downside. In the event that the global outlook deteriorates, Asia’s policymakers have plenty of room to loosen both fiscal and monetary policy.