US “financial market shock” will pull down growth in Asian region – ADB

The bankruptcy of Lehman Brothers and the sale of Merrill Lynch to Bank of America will pull down growth in the Asian region, said Thomas Crouch, ADB’s deputy director for the Southeast Asia department, after a press briefing on the economic outlook for the Philippines for the rest of the year. The ADB has cut down economic growth forecasts for the Asian region and expects inflation to hit almost 8%. The update on the Asian Development Outlook, however, was finished before the US financial crisis erupted, so the numbers are expected to change.
“This is an event…(which) makes for a less benign global environment. It’s going to slow things down…it’s going to slow down investment flows…it’s going to make investors more cautious,” Crouch said. He added that this “potential financial market shock” would make it “more difficult” for economies that are still recovering from the fuel and commodity shocks. The impact on the Philippines will also depend, in part, on the government response. He added that the Philippine economic team has done well to focus on fiscal stability.


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