Asia's firm fundamentals limit crisis exposure

By Paul Eckert, Asia Correspondent

WASHINGTON (Reuters) - Most Asian economies are poised to ride out global financial turmoil thanks to healthy foreign reserves and fiscal balances and because their banks shied away from toxic assets, the head of the International Monetary Fund's Asia department said on Sunday.

David Burton, the IMF director for the Asia and Pacific region, said the diverse, trade-dependent continent was by no means immune from shocks emanating from the United States and would face an economic slowdown.

But Asian economies, which suffered a financial meltdown a decade ago, were sitting better than many others, he told Reuters in an interview.

"The region as a whole is in a much better position to withstand the financial turmoil we're seeing, although it's very severe, because of the strengthening of countries' policy framework that has gone on over the last few years," said Burton.

"Most of the countries in Asia have sizable foreign reserves, they've strengthened their banking systems a lot over recent years, and there's very little significant exposure to foreign toxic assets in Asian banking systems," he added.

Burton noted that some banking systems in Asia faced crisis-driven pressures, including dollar shortages in money markets, while the region's equity markets have plunged along with their Western counterparts.

Trade was an area of great exposure to the global downturn.

"Most Asian economies have a large export sector, and Asian countries are slowing down," he said. "Growth is going to slow around the region."  Continued...