Washington - Asian economies were not exposed to toxic US mortgage-related assets at the heart of the ongoing recession, but they have been heavily impacted by the subsequent slump in global trade, the International Monetary Fund said Wednesday.

Advanced Asian economies were the hardest hit and for the region as a whole, and gross domestic product (GDP) is expected to contract by about 6 per cent in 2009 after expanding by 3.5 per cent before the crisis started unravelling in 2007.

Japan's economy contracted at a 12-per-cent rate in the fourth quarter of 2008, while the economies of Hong Kong, Singapore and Taiwan experienced declines of between 10 and 25 per cent, the IMF said in its updated World Economic Outlook.

Japan's economy is projected to further contract by 6.25 per cent in 2009, with a mild deflation expected through 2010. IMF economist Charles Collins warned that, while there should be some recovery in 2010, the country's government "doesn't have much room" to boost spending should things take an even greater turn for the worse.

The IMF said Singapore and Hong Kong were also particularly vulnerable, given their importance as global financial centres.

The drop in global demand for cars, electronics and other consumer durable goods, which are the mainstay of Asia's manufacturing sector, contributed to the steep decline in industrial production and exports.

While the world's two most populous nations - China and India - have been affected by the contraction in exports, the IMF noted that their economies have actually continued to grow as trade is a smaller share of their economies and their governments have supported domestic activity.

"We do see China showing some considerable resilience," Collins told reporters. "This is clearly a very positive support for the region and even for the global economy."

Other impacts of the wider global financial crisis in this region have ranged from falling equity and bond prices, increasing pressure on real estate markets especially in Singapore and China, and the depreciation of currencies in some of the region's emerging economies.

The IMF said that while advanced Asian economies were projected to experience a sharp drop in activity or even experience deflation, emerging Asian economies - led by China and India - were expected to grow.

"A modest recovery is projected in 2010, underpinned by a pickup in global growth and a boost from expansionary fiscal and monetary policies," the report said.

China's growth was expected to slow to about 6.5 per cent in 2009 - it recorded 13-per-cent growth before the crisis - but this was still strong in the global context. In India, growth is expected to sharply decline from more than 9 per cent in 2007 to 4.5 per cent in 2009.

Growth in Association of South East Asian Nations (ASEAN) economies was expected to decline from more than 6 per cent in 2007 to zero per cent in 2009. (dpa)