SINGAPORE, Feb 4 (Reuters) - Hong Kong-based broker CLSA has sharply cut its outlooks for South Korea, Taiwan and Singapore, saying their economies would shrink even more this year than during the Asian financial crisis a decade ago.
"Asia, having avoided the perils of too much leverage, is finding that its growth is acutely vulnerable to the cessation of demand from the west," CLSA economists said in a research report.
The forecasts released on Wednesday are so far the lowest by any bank or broker for those three countries. The comments come a day after the International Monetary Fund underscored the dismal state of Asia's economies by cutting its growth forecast for the region to just 2.7 percent from a November forecast of 4.9 percent.
CLSA expects gross domestic product in South Korea, Asia's fourth-largest economy, to shrink by 7 percent this year, reflecting falling exports, consumption and investment. Its previous forecast was for 1.7 percent contraction.
It expects Taiwan's economy to shrink by 11 percent in 2009, making it the worst performer in Asia and saying it was "tying with Singapore as the most vulnerable economy in the region". Its previous forecast was for a contraction of 2.7 percent.
Singapore will be hit by falling trade, declining property prices and its exposure to the financial industry, CLSA said, with gross domestic product expected to shrink 10 percent, down from its original forecast of a 2.6 percent decline.
CLSA maintained its previous growth forecast for China at 5.5 percent. It lowered its view on Indonesia, predicting growth of less than 1 percent, compared with previous 2.2 percent, and slashed its forecast for Hong Kong to a contraction of 5 percent from a drop of 1.7 percent. (Reporting by Jan Dahinten; Editing by Tomasz Janowski)