We expect the world recovery will lose momentum in 2010-11 but do not anticipate that the recent turmoil in the markets will derail the global upswing. The implication for Asia is that the regional rebound will slow rather than stall and it remains likely that growth will stay far higher than elsewhere. Accordingly, Asian central banks will be focused on inflation. Policy rates will move up further and most countries will be nearing the end of their tightening cycles well before rate hikes even start in the US and in Europe. Finally, we continue to forecast that Asian currencies and stocks will end 2010 stronger and higher than where they finished 2009.
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