Asia has already taken a big hit from the slump in exports as the global recession has deepened. But the latest data also show that, with bankruptcies rising, job losses mounting and confidence depressed, the weakness in exports has spread to private domestic demand. Large fiscal packages have been announced across the region, but the benefits are likely to be felt late in the year. With global demand for Asian goods continuing to wane and private domestic spending weakening, we expect GDP growth in Asia ex-Japan of roughly 2.5% this year, on a par with the trough of 2.4% during the Asian financial crisis in 1998.
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