AS AMERICANS and Europeans cut back on their spending in what many expect to be a global recession, economists are looking to Asian consumers as the last hope to preserve economic growth in parts of the world.

Political leaders across Asia have been tailoring policies to encourage their people to spend rather than save, said The New York Times (NYT) yesterday.

India has given generous raises to the country's four million civil servants, hoping that they will spend some of the money.

The government also encourages banks to lend by reducing the amount of cash they are required to deposit with the central bank

Similarly, China has lowered bank-reserve requirements to encourage lending, cut interest rates and reduce taxes, while Japan and Taiwan have raised government spending on all kinds of projects.

British think-tank Chatham House said in a report on Wednesday that emerging markets, led by China, were likely to continue growing their economies.

'Steady Chinese growth offers the best hope for limiting the damage to the world economy through the present crisis,' said report author Vanessa Rossi.

Although the slump in the stock markets is causing rising tensions, emerging markets are now big enough and sufficiently interlinked in promoting pro-growth policies to sustain their own growth in trade and gross domestic product against a background of low growth in the United States and other major developed countries, Ms Rossi added.

It is, however, far from clear whether Asians will pick up the slack in consumption.

Most economists say current economic conditions will make it hard to persuade Asian consumers to replace Western buyers.

'Consumer behaviour cannot be changed by the wave of a wand,' said chief economist Ifzal Ali at the Asian Development Bank.

And even with more than a billion inhabitants each, China and India have total personal consumption spending that lags behind that of Germany, which has 82 million people, according to Morgan Stanley Asia chairman Stephen Roach.

Still, many economists are hopeful, said NYT. For example, the Chinese economy, until this summer, had double-digit growth. The government also has a small budget surplus and modest debts, which give it a lot of room to cut taxes and spend more on big projects.

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