UBS Warburg Asia chief economist Arup Raha expects the shattering of consumer hopes of global economic recovery in the wake of terrorist attacks in the United States to create added economic fall-out.
'Since the disaster, what really has changed is that it's now quite clear the US is going into a recession, largely because the consumer is going to capitulate,' Mr Raha said.
As a result there would be a further dampening of consumer sentiment in the US and Asia and less demand for Asian exports.
Before the attacks, Asian interest-rate cuts had been supporting consumer balance sheets through lower credit card and mortgage payments.
'Even though consumption was moderating in Asia, there wasn't a meaningful change in consumer behaviour because people were able to look through the downturn,' Mr Raha said.
'Their income expectations were higher and their unemployment expectations lower. Those expectations have changed.'