Asia, excluding Japan and China, will grow 4.3 per cent next year after a 1.4 per cent expansion in 2009, Mr Richard Iley, an economist at the bank, wrote in a report, according to Bloomberg news. Public spending in China, Taiwan and South Korea, combined with increasingly loosemonetary policy, should help to drive a 'reasonably vibrant' recovery, he said.

Asian governments are planning more measures to boost growth as a slump in global demand hurts exports, deepening the region's economic slowdown. South Korea has pledged about $30 billion in extra spending and tax cuts since September. China may follow a 4 trillion yuan spending package announced November with a second plan as early as this month.

'The scale of the global policy response - monetary and fiscal - should ensure the recovery is more V than U-shaped,' Mr Iley said. 'In many instances, economies will experience a 6 to 7 percentage point swing in growth rates.'

The MSCI AC Asia Pacific Index rose 1.9 per cent at 1.43 pm in Tokyo today, taking its gain since reaching a five-year low in October to 23 per cent.

Mr Iley's report, titled 'Asia: Apocalypse Now,' said that before improving, Asia's economic growth would deteriorate in 2009.

'Global industrial production appears to have collapsed at a 30-40 per cent annualised rate since September,' he said, referring to the 'biggest demand shock since the 1930s.'

Bloomberg said as a result of the drop in output, BNP Paribas cut its 2008 forecast for Asian economic growth to 1.4 per cent from a November prediction of 3.9 per cent. The region comprises Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand, according to BNP Paribas.

Mr Iley said China will grow about 7.7 per cent in 2009, helped by the November fiscal package 'worth an eye-popping' 14 per cent of gross domestic product over two years. The economy probably expanded 9.3 per cent in 2008, slowing from 11.9 per cent the year before. He predicted 8.1 per cent growth in 2010.

Hong Kong will grow 3.5 per cent in 2010 after shrinking 3.4 per cent this year, the bank predicted. Taiwan will expand 3.9 per cent after contracting 3.3 per cent; Singapore will grow 4.4 per cent after declining 2.8 per cent this year. South Korea will expand 3.2 per cent, rebounding from a 2.4 per cent contraction.