Kathryn Matthews, Asia chief investment officer for Fidelity International, says an economic slowdown in the US will have an impact on Asian profits, but despite current volatility in the market, GDP growth in the region should remain high, albeit off recent peaks. The forecast of around 7.5 per cent GDP growth in 2008 for the Asia ex- Japan region is currently five percentage points more than Japan, the UK and Europe.

Ms Matthews says there are several strong props to the Asia economy: national savings levels in the region have increased five-fold in the last 20 years as consumer debt levels have fallen dramatically.

Secondly, corporate debt levels are much lower than in the recent past – a decade ago the debt to equity ratio was more than 80 per cent whereas the forecast for 2008 is below 20 per cent.

Thirdly, the financial position of most Asian governments also looks good. Foreign exchange reserves are healthy and their debt levels are looking better than the rest of the world.

The growth in Asian exports to the US has already slowed sharply from 18.6 per cent in March 2006 to just 3.1 per cent in March this year. But this has been partly offset by exports to commodity producers.

But Ms Matthews believes that the risk lies with inflation, which has spiked this year, primarily due to rising food prices. Many governments have been willing to put up with the inflation in the short-term, using pricing policies and subsidies to protect the man in the street, but recently, however, there has been an increasing realisation in some countries that inflation won’t go away quickly and governments have started to take some action by raising interest rates or through other more restrictive measures.