HONG KONG, Oct 9: The economies of selected Asian nations will be the chief beneficiaries of an early United States recovery, international investment bank ING Barings said on Tuesday.

ING Barings said the economies’ capability of generating strong domestic demand would make them winners when the US economy recovered towards the end of the first quarter of 2002.

It predicted the positive outcomes for Hong Kong, South Korea, China, Indonesia and the Philippines, based on a demonstrated pick-up in consumer demand in the second quarter of 2002.

Asian consumers were looking at the US economy and once it stabilized it would act as a psychological boost to regional economies, the bank said.

ING Barings chief economist Tim Condon said Hong Kong was likely to post gross domesic product (GDP) growth of 4.0 per cent in 2002 despite expected negative growth of 0.5 per cent for 2001.

Condon said fiscal and monetary stimuli currently being implemented in the US, coupled with quick military action against Afghanistan by US-led forces, would be the necessary spur to boost consumption in the US.

There is no reason why monetary and fiscal measures will not work. There are no structural impediments in the US to prevent a recovery in the first quarter and when the US economy stabilises, sentiment will improve markedly in Asia, he said.

The economist said he was expecting Hong Kong to experience deflation in 2001, with in consumer price index of negative 1.5 per cent expected for this year and positive 0.5 per cent in 2002.

However, not all Asian countries would benefit equally from the recovery in the US, ING Baring said.

Taiwan, Thailand and Malaysia in particular suffered from “Asiasclerosis” — where GDP growth has been hampered by asset restructuring in the aftermath of banking crises.

It said the difficulty of restructuring assets depressed the return on capital and undermined domestic demand.

ING Barings added a turnaround in these countries depended on export demand.

They will underperform the rest of the region until a recovery in export growth trickles downs into stronger domestic demand, the bank said.—AFP