The turmoil in Greece and in other peripheral Euro nations could crimp growth in Asia this year, according to the Royal Bank of Scotland (RBS), despite Asia's high savings rate and the relatively strong financial systems in the region.
That's because a large proportion of the region's export-driven growth is dependent on Europe's consumers, the bank wrote in a recent report.
In the first quarter of this year, for example, 15.4 per cent of all Asian exports were sent to Europe.
"The biggest potential victims of Asia's economic links to Europe are the very trade-driven economies of Singapore, Taiwan, Korea and Thailand," said Emil Wolter, Head of Regional Strategy, Asian Equities at RBS.
Growth in these countries is likely to fall in the event of an EU slowdown given the high exports to GDP ratios in these countries. Should exports to Europe fall by 30 percent in 2011, RBS estimates Singapore's economy could expand just 5.3 percent for the year, which is at the low end of the government's estimates of between 5 and 7 percent.
But the bank says, the Chinese economy will not be hugely impacted should exports to Europe fall. China exported a total of $23.8 billion to Europe in the first quarter of 2011, of which 17.9 percent was to debt-ridden European nations Portugal, Ireland, Greece, Spain and Italy. But the bank points out these exports to Europe's peripheral nations is just a drop in the ocean and makes up only 3 percent of China's total exports to the world.