Growth forecasts for Asian economies could be revised downwards for next year if the troubled euro collapses, according to Merrill Lynch economist Bill Belchere. Mr Belchere said Merrill Lynch had been steadfast in praising Asia's ability to survive external shocks such as rising oil prices. However, he is questioning the possible worsening of the euro and the effect this would have on Asia's trade. 'Europe is a more important trading partner for Asia than Japan,' Mr Belchere said. 'Will [a further decline in the euro] be the X-factor that tips Asia into recession? Unlikely we believe, but downward gross domestic product revisions could ultimately be on the cards.' On Friday, the euro fell after four days of rises to close at 87.62 US cents from 88.35 US cents on Thursday. The euro was also weaker against the yen, slipping to 94.55 yen from Thursday's 94.98 yen. The European Central Bank and the Group of Seven industrialised nations took the market by surprise last week when they intervened in the marketplace. Reports later said analysts doubted they would intervene again but sentiment remained poor towards the currency. On Thursday, the Danes voted against swapping the krone for the euro. Analysts say the decision could spell disaster. 'Growth is slowing down . . . the question is to what extent will it affect Asia,' Mr Belchere said. 'We're a soft-landing house but there are still [oil and euro] risks popping up.' Mr Belchere said while it was unlikely the euro would be the factor that tips Asia into recession, downward GDP revisions could be on the cards. Capital flows between Asia and Europe were under-appreciated, he said, as European banks played a more important role than Japanese or United States banks. 'At present, we have a GDP growth forecast of around 6 per cent for Asia for 2001,' he said. 'We could drop below 5 per cent if the external environment continues to deteriorate.' HSBC economist George Leung Siu-kei said while demand in the trade sector amid a collapsing euro would fall dramatically, he doubted it would be the factor in breaking Asia's growth story. 'If you're talking about the relative impact of oil or the euro on Asia, then oil prices will have more effect,' Mr Leung said. 'The drop in the euro has been gradual . . . if it falls apart, that would be an exceptional case.'