The survey of 12 regional economies, excluding Japan, shows that most are expected to slow a little from 2006 as exports cool, but they are forecast to rebound next year.

The slowdown this year means inflation forecasts have been lowered in just over half of the countries polled.

Thailand is the only economy where the 2007 growth forecast has been slashed as political uncertainty following a military coup last September plus subsequent policy flip-flops have knocked consumer confidence and investment.

For the rest of Asia the outlook is brighter than estimated, with lower interest rates, buoyant housing and job markets and higher government spending likely to bolster domestic demand.

Domestic consumption accounts for around 60 percent of Taiwan’s gross domestic product and makes up about 70 percent of GDP in the Philippines.

“In 2007, domestic demand is the buzz word,” said Dong Tao, chief regional economist at Credit Suisse in Hong Kong.

He said the main risk to Asia’s economic outlook now were worries about a U.S. recession and volatility in global financial markets.

Rising consumption is also the reason why economists say a slowdown in China’s booming economy is unlikely to be as great as they had estimated in the last poll in November.

China’s GDP growth is forecast to ease to 10.0 percent this year from 10.7 percent in 2006, against a previous forecast of 9.5 percent.

The world’s fourth-largest economy is set for a fifth straight year of double-digit growth, reinforcing the view that further monetary tightening will be needed to curb inflation.

China’s central bank has raised benchmark lending rates twice and increased the amount that commercial lenders have to hold in reserve five times since last April.

In Southeast Asia, economists have cut Thailand’s 2007 GDP growth estimate to 4.0 percent, which would be a six-year low, from 4.5 percent in November.

“Basically, political uncertainty is seen weighing on both consumption and investment. Right now, only the external sector is seen supporting the economy,” economist Vishnu Varathan at Forecast in Singapore said.

In contrast, optimism on the Indonesian economy has been growing as lower borrowing costs and steady commodity exports have helped the country recover from a 2005 currency and budgetary crisis.

Economists expect the economy to grow 6 percent in 2007 — the same forecast as in November — after 5.5 percent last year.

Inflation in much of Asia is expected to be tame in coming months as global growth is cooling and oil prices have declined.

The Reuters poll forecast average inflation in the Philippines would ease to 4 percent this year from 6.2 percent in 2006. Malaysian inflation is seen slipping to 2.7 percent from 3.6 percent last year.

China was the only country polled where 2007 inflation forecasts were raised. The consumer price index there is expected to rise 2.2 percent this year versus a previous forecast of 1.7 percent and above a five-year average of 1.5 percent.

As for currencies, the New Zealand and Taiwan dollars were expected to see some of the sharpest moves.

The Taiwan dollar, one of Asia’s weakest currencies this year, is tipped to rise just over 1 percent to 32.6 to the U.S. dollar by the end of June, benefiting from speculation about U.S. rate cuts.

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