Morgan Stanley on Monday further slashed its growth forecasts for Asia next year due to increasing risks from the debt crisis in Europe and weakening domestic demand. Asia excluding Japan is now expected to grow 6.9 percent instead of its previous estimate of 7.3 percent, the US bank said in a report. It was the second time in three months that Morgan Stanley has downgraded its growth forecast for the region.
"Since we downgraded our regional growth outlook in August 2011, we have been constantly worried about the increasing downside risks to growth," it said. In its report, Morgan Stanley said Asian governments are expected to "initiate targeted fiscal policy measures" and further ease borrowing costs in order to boost domestic growth.
It expects "limited" interest rate cuts in India, Indonesia, South Korea, Malaysia and Thailand next year. Morgan Stanley is forecasting China's economy to expand 8.4 percent instead of its previous projection of 8.7 percent. India is expected to grow 6.9 percent, down from its earlier estimate of 7.4 percent and Indonesia is seen growing 5.6 percent instead of 5.8 percent.
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