Economists are divided on whether turbulent United States equity markets could derail the nascent regional and global recovery and cause a 'double-dip' US recession. 'I think the consensus was we were in a solid - not spectacular - recovery, but that's not the way markets are reacting,' said Timothy Bond, Merrill Lynch's head of Asian economics. Mr Bond said he feared that the impact of accounting and corporate scandals on US and regional markets may take longer to subside than many hoped. It could undermine sound economic data coming out of the US. 'Overall, all of the data we get is showing we are indeed in for a solid recovery. The next few quarters is going to be great but 2003 is in question,' Mr Bond said. 'US capital investment and US consumers down the road might not be as solid as people expect.' Mr Bond said he did not think there would be a double-dip into recession in the US, but it was still a worrying prospect. Chan Kok Peng, Singapore-based chief economist for BNP Paribas Peregrine Securities, said he did not believe the regional recovery was under threat from a US double-dip. 'The bond market is showing a strong recovery. Look at the manufacturing sector numbers. The housing market is very strong. Only the equity market in the US has been damaged by all the accountants,' he said. Mr Chan said a double or even triple-dip into recession had occurred historically only when there was high inflation in the US. Commercial Economics Asia analyst Patrick Vizzone agreed that the anaemic equity markets were being caused more by psychological factors than economic fundamentals. Mr Vizzone said two leading indicators showed muted improvement in economic fundamentals in the US: both the Organisation for Economic Co-operation and Development (OECD) composite leading indicator and Singapore's exports to the US had been 'trundling northwards'. 'It's worked like clockwork for the past five years: when Singapore's domestic exports start turning northwards, so does US industrial production, which is good news for the economy,' Mr Vizzone said. The Singapore figure pre-empted US industrial production by three to four months. The OECD's report is a two-month leading indicator of Hong Kong's reexports, most of which come from or go to the mainland, as it reflects OECD demand for manufactured goods from China. Mr Vizzone said he was not concerned that Hong Kong's re-export growth fell to only 1 per cent year on year in May, after gaining 3.7 per cent in March and 4.7 per cent in April. Growth in reexports would feed into improved retail sales and eventually help real estate stocks, he said. Such sentiment was not universal. National Australia Bank economist Kevin Lai said the weakening US dollar and corporate crises had made a double-dip 'increasingly likely'. As some Asian countries had yet to emerge from last year's recession, a double-dip would only prolong the pain as US demand for Asian exports waned. Asian currencies would continue to strengthen against the waning dollar, further dragging down the competitiveness of Asian exports. Mr Lai disagreed with those who said the waning US dollar would help ease Hong Kong's deflation through the dollar peg, because it took a long time before currency changes filtered through to consumer prices such as rent and wages. However, because the yuan was virtually fixed to the US dollar, the increasing competitiveness of China's exports would help Hong Kong's reexport trade. 'I think this weak US dollar cycle will stay for the rest of this year,' Mr Lai said.