US slowdown to drag down global growth

Bangkok: A slowdown in the US economy is likely to affect global growth next year, but economists say Asia and Europe should remain fairly resilient amid signs of healthy consumer demand.

As a cooling US housing market weakens Americans' appetites for imports, the swelling ranks of middle-class consumers in China, India and the rest of emerging Asia are seen picking up the slack.

Europe's growth may also slow down, but the outlook is also positive due to renewed consumption and falling unemployment.

"While the world's other major economies will be affected by slower US growth, their own domestic demand should continue to drive global growth," Swiss bank UBS said.

The question is whether the US will slow gradually while avoiding a jump in inflation - called a "soft landing" - or slide into a recession, which could seriously stifle global growth.

"We think it will be a soft landing," said Dong Tao, chief regional economist at Credit Suisse in Hong Kong. "But the rest of the world is starting to pick up the slack," he said. "Domestic demand will determine winners and losers."