But if Asian policy makers are hoping for such a spending binge to help their economies weather a global downturn, they may be disappointed.

Consumer price inflation is at its highest since 1982 in Singapore and it is at multi-year peaks in Thailand, Indonesia and other parts of Asia, with prices rising faster than interest rates.

At the same time, global growth is slowing, the United States is staring at recession, corporate profits are tumbling and banks hit by the credit crisis are cutting jobs by the thousand.

'If you know that six months down the road the outlook may not be as rosy as now or that you may lose a job, people tend not to commit themselves to big-figure items, like buying a new car,' said Alvin Liew, an economist with Standard Chartered Bank.

'So it is fairly difficult to say that negative real interest rates would have that kind of impact. In times like this, it tends to drive up precautionary savings.'

In economic parlance, inflation erodes a consumer's purchasing power. When prices rise too fast, cash becomes worthless over time.

In Asia, real interest rates - nominal interest rates minus inflation rates - have turned negative in countries such as Japan, Singapore and Thailand.

That might not be the ideal situation as far as fighting inflation is concerned, but, for a while at least, economists say it may give central banks some breathing room while they wait to see how badly the world economy is affected by the credit crisis.

'As long as inflation is high, real policy rates are actually falling, so policy makers do not have to cut by as much as you might think,' said Matthew Hildebrandt, an economist at JPMorgan.

'They are already having what we would consider looser monetary conditions by doing nothing, simply because inflation is rising,' he said.

JPMorgan estimates the average real interest rate in emerging Asia is just 0.67 per cent, which in theory is so low that everybody should be out spending or taking out loans.

Mr Hildebrandt reckons such low effective returns would 'get people to put their money in the economy, which would then help if there is a concern about growth'.

Negative real rates
South Korea's policy rate is five per cent, but transport costs climbed 10.2 per cent in January from a year earlier and education costs soared 6.3 per cent in that period.

Taiwan's policy rate is 3.4 per cent. In January, the annual inflation rate was 3.8 per cent for clothing, 18 per cent for medicine and 25 per cent for fruit.

Annual consumer price inflation in Singapore was 6.6 per cent in January, way above the three-month money market rate of 1.6 per cent, giving a negative real interest rate of five per cent.

Compare that with the return on property in Singapore: investors in private residential property showed capital gains of 30 per cent on average in 2007.

The situation is similar though less pronounced elsewhere. Inflation in Thailand touched an 18-month high in January while Indonesian consumer prices rose 7.36 per cent, the fastest annual rate since September 2006.

Since the U.S. Federal Reserve began easing policy in the second half of 2007, only China and Taiwan have raised rates. Indonesia and the Philippines have cut policy rates, while others such as South Korea seem to be in a bind over where to go next.

The real interest rate is almost minus one per cent in Thailand, and close to zero in Taiwan, the Philippines and China. That, viewed in isolation, is an incentive for Asian consumers to forget their propensity to save, pull their money out of bank deposits, and spend or invest it.

But, given the uncertainty surrounding economic growth, jobs and incomes, economists doubt Asians will spend all that much.

'We just want to bear in mind that in a tighter credit market situation where growth is slowing, people would be more cautious about spending,' said Vishnu Varathan, an economist at Forecast.

'You would want to save more in case there is more downside and people might still lose their jobs.'

The subprime mortgage crisis could have wider ramifications for credit, risk pricing and the cost of money globally, he said.

'I would think twice about charging anything to my credit card.' -- REUTERS