Asia's growth in domestic demand will outstrip US

Gulf News Report

Dubai: Gulf investors should be quick in taking advantage of the Asian investment opportunities as the the continent's growth in domestic demand has the potential to overtake that of the US and emerge the key driver of global economy said an expert in Dubai yesterday.

Speaking at the first 'Pulse of Asia' investor conference organised by the Dubai branch of the Singapore based DBS bank, David W. Carbon, Managing Director, Economic and Currency Research of DBS said: "Asia is no longer small to be ignored. Increasingly it is the domestic demand from Asia that is driving its growth. In 2007, for every dollar of fresh demand the US generate, Asia will generate demand worth 89 cents. In three to four years Asia is likely to overtake US in terms of domestic demand."

Recognise opportunities

The huge domestic demand is driving Asian growth rates to above 6.5 per cent while US and the euro zone are growing at 2.75 per cent and two per cent, respectively.

"Recognising the Asian opportunities, investors from the GCC have been pouring money into real estate, banking and infrastructure across Asia in the recent months. With the Pulse of Asia event in Dubai we are now bringing Asia and Middle East culturally and economically closer," said John J Baggerman, General Manager of DBS Dubai.

Structural slowdown

Although Asian growth rates are expected to experience a mild slow down in 2007, Carbon expects the slowdown to be more structural than cyclical. "India and China are adopting measures to cool down their econ-omies through both fiscal and monetary measures.

"Central banks of these two countries are expected to further tighten interest rates to maintain sustainable growth. However the growth trajectory of other Asian economies are inclined upwards," he said.

Commenting on the fears of a global economic slowdown, Carbon said the risk of a recession is receding as US current account deficit situation is past its peak, oil prices are not unidirectional and the US housing prices area stabilising.

"About 90 per cent of the slowdown has already happened and the on policy front the Federal Reserve is expected to cut interest rates by 25 basis points in the third and fourth quarter of 2007."