“Asia may pay a multibillion-dollar price for the Sept. 11 terrorist attacks in the U.S.,” writes Jason Booth in today’s Wall Street Journal.

“Economists from both the public and private sectors say the impact of the attacks on Asian growth will be significant. The numbers also highlight what had become the dominant trend in Asian economies even before the terrorist attacks: Countries with large domestic economies and less exposure to the U.S. will likely weather the fallout much better than those that depend on exports to the West.”

” ‘Economic growth will have to be driven by domestic demand. Exports are not going to be the driver of this region,” said Timothy Condon, regional economist for ING Barings.”

“The United Nations predicts the terrorist attacks will slice 2.4 percentage points from Asia’s gross-domestic-product growth, excluding Japan and China, this year, the equivalent of about $50 billion in lost economic activity. The U.N. now expects Asian growth to reach 1.7% this year.”

“Japan’s economy will shrink 0.5% this year, compared with an earlier prediction of 0.7% growth, according to the U.N. That amounts to about another $50 billion in lost economic activity.”

“Cuts in growth forecasts by private-sector economists aren’t as extreme, partly because the U.N.’s estimates, by its own admission, were overoptimistic before the attack.”

“Merrill Lynch cut its forecast for growth in Asia, excluding China and India, to less than 1% in 2001 and about 4% in 2002, compared with 1.6% and 4.5%, respectively, prior to the attack.”

“Lehman Brothers is looking for 3.2% growth in the region, down from 4.1% before Sept. 11. Lehman’s regional growth figure, excluding Japan, is higher because it includes China’s trillion-dollar-plus economy, from which it expects a relatively buoyant 7% growth this year.”

“The U.N. highlights China as a standout among Asian nations. It predicts China’s economy will remain unchecked by the attack, growing 7.5% this year.”

“China’s relative isolation from the U.S. economy — exports to the U.S. account for only 3.7% of its GDP — is serving it well in these turbulent times. Despite the terror attacks, analysts estimate China’s domestic consumer spending will rise 9% or more this year from 2000, roughly two percentage points more than GDP growth for the year. South Korea’s domestic demand is also holding up. While the nation is a major exporter, exports to the U.S. made up only 5.7% of GDP in 2000.”

“Yet the situation is very different in economies such as Hong Kong, Singapore, Malaysia and the Philippines, where the U.S. accounts for as much as 26% of GDP. In these markets, not only have exports plunged, but the threat of terrorism is raising expectations that business conditions could get substantially worse.”