Asia would be hit by a U.S. recession-M.Stanley

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SINGAPORE, Nov 14 (Reuters) Asia would be hit by a recession in the United States because it heavily depends on the world's top economy, a Morgan Stanley executive told Reuters, rejecting a view Asia has ''decoupled'' from the rest of the world.

The notion that the United States is no longer the driver of world economic growth has become increasingly popular among investors as a boom in China, India and other emerging markets has spurred demand for raw materials and manufactured goods in Asia.

''Asia will not receive special dispensation from a U.S.

recession. It is export-led and while there's a lot of intra-regional trade in Asia, the biggest end-market is the United States,'' Stephen Roach, the U.S. bank's Asia chairman, said in an interview on Wednesday.

Roach, who sees more than a 50 percent chance of a U.S. recession next year, said that investors subscribed to the decoupling theory because it suited them.

''It's a scenario that says 'you don't have to worry about anything'. Don't buy it. A recession in the U.S. doesn't spell the end of the world for Asia. All it means is that Asia has not repudiated the laws of the business cycle,'' he said on the sidelines of a conference for the bank's clients in Singapore.

According to a Nov. 7 survey ahead of the holiday shopping season in the United States, six in 10 U.S. consumers believe a recession is likely in the next three to six months, reflecting concerns about jobs and the U.S. housing meltdown.

Meanwhile, China's growth is expected to top 11 percent this year and the country appears to have largely escaped direct damage from the U.S. subprime mortgage crisis.

''What worries me is the view that many people have that there is a new Asia that is immune to anything and everything that occurs in the world economy. How can that be?'' said Roach, who was Morgan Stanley's New York-based chief economist for 25 years before moving to Hong Kong to become Asia chairman this year.

''Asia is the best example of what globalisation has done for economic development and globalisation is about integration. You either believe in globalisation or you believe in decoupling. You don't believe in both.'' REUTERS SLD SSC1129

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