US growth could nearly halve if the mainland devalues its currency and Japan's economy deteriorates further, a forthcoming report by an influential Washington-based think-tank will reveal.
The report, by the conservative Heritage Foundation, will also warn that further devaluations in Asia could lead to a massive blow-out in the US trade deficit, advancing the cause of protectionist US politicians.
William Beach, director of the foundation's centre for data analysis, said the report would provide evidence that Asia's economic problems had escalated because of structural, rather than solely financial, problems.
The Heritage Foundation publishes the annual Index of Economic Freedom, which last year voted Hong Kong the world's freest economy.
Mr Beach said estimated US economic growth for this year could fall from forecasts of about 2.5 per cent to 1 per cent, a US$140 billion blow to gross domestic production.