ADB Kuroda Says Asia Economy "Not Immune" To US Slowdown

Asian economic growth, although still strong, is not immune to the U.S. economic slowdown, Haruhiko Kuroda, president of the Asian Development Bank, said Friday. Although the impact of the subprime crisis on Asia has so far been limited, "a deep U.S. recession, should it occur, would slow down Asia significantly," Kuroda, a former top bureaucrat at the finance ministry, said at a Asian Development Bank and Asian Development Bank Institute joint symposium. He added that Asian banks' exposure to subprime losses is very limited, but the risks of a spillover from further credit market tightening is potentially large. Therefore, "it's important to expand domestic demand" to sustain Asian economic growth, he said. While the Japanese economy may be currently growing at 1%-1.5%, it seems likely to recover toward 2% in the second half of the year, he said. The negative impact of the construction slowdown due to a change in Japanses building standards laws is likely to fade, Kuroda said. Kuroda is seen as a possible candidate to replace Bank of Japan Gov. Toshihiko Fukui when his term ends in March.