Financial tsunami makes Asian exporters nervous

Seoul: Han Seung-woo is casting a wary eye on the financial crisis erupting halfway around the world on Wall Street.

From garment makers in southern China to real estate agents in India, businesses across Asia are worried that the turmoil will filter through to them.

"I'm watching nervously," said Han, the president of Sam-A Techno Solutions, a technology services company in Seoul with ten employees and annual sales of three billion won ($2.7 million).

Even before last week's dramatic events, the econ-omic slowdown in the US and Europe were dragging on Asia's biggest economies in Japan, China and South Korea. Now, the worry is it could get worse.

The fears highlight the growing realisation that Asian economies have not "decoupled" as much from their longtime dependence on the US market as some had previously thought or hoped.

"Right now people somehow conclude that decoupling is a myth," said Citibank Korea economist Oh Suk-Tae.

Lending has tightened around the world as Western banks stagger under the weight of billions of dollars in bad loans and mortgages that have accumulated from the wave of US home foreclosures.

World markets rallied on Friday on news of a US government plan to rescue banks from billions of dollars in bad debt.

Han, the South Korean businessman, said if the bailout plan stabilises the US economy and exchange rates, that would obviously be positive.

But whether the worst is over remains to be seen, and the economic outlook is still plenty murky for businesses across Asia, especially smaller ones that lack the financial resources of larger corporations.

"We're OK until the end of the year, but I have no idea what 2009 will look like," said Christopher Fussner, president of Singapore's TransTechnology, which has 165 employees in nine Asian countries.

"My clients are trying to digest what's going on." Volatile markets also could undermine consumption and investment in Asia. Already, corporate borrowing costs are rising as investors demand a greater premium on corporate bonds, creating a drag on investment in the region.

"We have a perfect storm in the making," said Ifzal Ali, chief economist at the Asian Development Bank in Manila.

He predicts the Wall Street meltdown means US economic weakness will last longer than thought, at least through 2009, seriously hurting exports from Asia, particularly China.