Bangkok  - There's an old saying among economists: "When the US catches a cold, the rest of the world catches pneumonia."

"But nobody says what happens when the US catches pneumonia," said Ammar Siamwalla, a respected Thai economist. "You don't catch a cold, but I don't know what happens."

That indeed is the billion-dollar question for Asia in 2009.

Most of Asia's dynamic emerging economies have been using exports as their engines of growth for the past decade or more.

If anything, the region became even more export-dependent in the aftermath of the 1997 Asian financial crisis, Asia's version of the meltdown that is now shaking the advanced economies.

Thailand, for instance, depended on exports for about 40 per cent of the gross domestic product (GDP) prior to the 1997 crash, but this has shot up to about 60 per cent of the GDP now.

"The export orientation is going to hurt us a lot," said Ammar.

It is going to hurt the entire Asian region. The US financial meltdown and resulting recession, which has spread to Europe and Japan - engulfing the world's three biggest markets - is already taking its toll on Asian exports.

India's October exports declined year-on-year by 12.1 per cent, Singapore's by 15 per cent, Indonesia's by 11.6 per cent and in Vietnam exports have been on the slide since July.

China's export growth slowed marginally in October, but, thanks to a greater decline in imports, the country still enjoyed a large trade surplus.

"The main body of China's economy is the export economy and the main target countries of exports lie in the EU and the US, so you will see more businesses affected next year," Liu Kaiming, the director of the Shenzhen Institute of Contemporary Studies, told Deutsche Presse-Agentur dpa.

In an effort to promote the domestic economy as exports decline, the Chinese government has promised to spend an estimated 4 trillion yuan (586 billion dollars) on 10 major programmes dominated by infrastructure projects, reduce some taxes and loosen bank-lending requirements.

But anyone hoping that China's huge domestic demand will provide a new growth engine for the rest of Asia is likely to be disappointed.

"Even though China may continue to grow at 7.2 per cent in 2009 it doesn't benefit the region," said Hong Kong-based James McCormack, Head of Asia-Pacific Sovereign Ratings at Fitch Ratings. "As their exports go down, their imports will go down, and South-East Asian exports will in turn go down."

Much of China's imports from the region are for industries that re-export them as finished products to the US and Europe.

Fitch Ratings, which may be more pessimistic about Asian growth in 2009 than others, forecast the following GDP growth or decline rates for the region - Hong Kong (-1.2 per cent), Singapore (-1.0), Taiwan (-1.7), Thailand (+0.9), Philippines (+2.8), Malaysia (+3.5), Vietnam (+3.8), Indonesia (+4.5), India (+5.8) and China (+7.2).

Although these figures are not so bad compared with the advanced economies, they are low by the region's standards and will translate into widespread unemployment in
2009.

Most governments are turning to fiscal stimulus policies to ease credit access, create jobs and encourage domestic consumption.

China has announced its 586 billion-dollar-package and well- planned Singapore has prepared a number of stimulus packages, such as 2.6-billion-Singapore-dollar loan and credit facilities for Singaporean companies.

Economic performance in 2009 will therefore depend to a great extent on the public sector, which poses a worry for countries such as Thailand whose recent governments have been plagued by an inability to provide leadership and direction.

"The next phase, looking ahead, you need to be driven by the public sector," said Chalongphob Sussangkarn, a senior economist at the Thailand Development Research Institute. "Therefore you need to have a very efficient government and a very efficient political system."

That's exactly what Thailand doesn't have, he acknowledged.

Even with efficient political systems, there is just so much most Asian governments can hope to do next year in terms of stimulating their economies.

"On the fiscal side, typically governments in Asia are quite small, so the room to manoeuvre here on the fiscal side is less than is some other regions of the world," said McCormack. The exception, of course, is China, which has vast foreign exchange reserves and a huge domestic market to work with.

While the China market may save China it will not save the rest of Asia, so the region's best hope is for a rapid recovery in the US and Europe.

Even this may prove elusive.

"US growth had been led by consumers who saved nothing," noted McCormack. "Now the process is being reversed. Households are being forced to save because the value of their assets has gone down and if the process continues, that means that their consumption growth has to be less than their income growth, which is bad news for Asian exports." (dpa)