"Every single Asian country is slowing and many, such as Thailand, Taiwan, Hong Kong and Singapore, are teetering on the brink of a recession," said Robert Prior-Wandesforde, Singapore-based head of India and Southeast Asia economics at Credit Suisse Group.
"If the eurozone crisis escalates and leads to possibly a break-up scenario, we will see very aggressive monetary and fiscal responses across the board in Asia."
Economists from Morgan Stanley, UBS, Nomura International and other banks have said European policy- makers must step up their crisis response to prevent the 17-nation currency bloc from breaking up.
Morgan Stanley's Chetan Ahya lowered growth estimates for Asia, excluding Japan, to 6.9 per cent in 2012 from 7.3 per cent previously.
Deadly floods in Thailand and Pakistan as well as storms in the Philippines have further dampened growth in those economies, adding pressure on policymakers to ease borrowing costs.
Thailand's industrial output slumped by the most in more than a decade in October as the nation's worst flooding in almost 70 years shut thousands of factories, including those operated by Western Digital and Honda Motor, a report showed this week.
The finance ministry cut its 2011 economic growth forecast to 1.7 per cent to 2 per cent from 2.6 per cent previously, and Prime Minister Yingluck Shinawatra has proposed spending 130 billion baht ($5.5 billion) on rehabilitation and measures to prevent future floods after the disaster claimed more than 600 lives since July.
"The floods, coupled with clearer signs of weakening global demand, provide sufficient justification for the central bank to start its easing cycle," said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse.
Eight of the 16 economists surveyed expect the Bank of Thailand to lower its key rate to 3.25 per cent from 3.5 per cent, with the rest predicting a half-point cut to 3 per cent.
It would be the first reduction in more than two years.
Governor Prasarn Trairatvorakul said last week the central bank will "significantly" cut its growth forecast for this year from the current 2.6 per cent to reflect the damage caused by the floods. He said earlier this month the authority "has room" to cut the key rate to support the economy.
Philippine gross domestic product increased 3.2 per cent from a year earlier in the third quarter, less than analysts estimated, a report showed yesterday.
Tropical storms hurt farming and faltering government spending that slowed construction was compounded by a 13.1 per cent plunge in exports.
Bangko Sentral ng Pilipinas may consider easing its policy rate, economic planning secretary Cayetano Paderanga said after the report.
Twelve of the 14 economists surveyed expect the central bank to keep the benchmark at 4.5 per cent, with two predicting a cut to 4.25 per cent.
President Benigno Aquino unveiled a 72 billion peso ($2.2 billion) fiscal stimulus package in October, joining neighbours including Malaysia and Indonesia in seeking to protect growth.
Bank Indonesia unexpectedly cut rates by half a percentage point to a record low this month of 6 per cent.
The State Bank of Pakistan has already lowered borrowing costs by 2 percentage points since the end of July, as policymakers aim to boost economic growth from 2.4 per cent in the year ended June 30, one of the slowest expansions in the past decade.
Economic expansion may be 0.5 percentage point lower than the government target of 4.2 per cent after floods devastated the nation's southern region, a finance ministry official said in October.
Floods in August forced more than one million people from their homes, killed more than 400 people and damaged crops in the southern Sindh province that was still recovering from last year's worst ever monsoon inundations.
Central bank Governor Yaseen Anwar may keep the discount rate at 12 per cent, said 8 of 14 economists surveyed. The rest expect him to lower the benchmark to 11.5 per cent on November 30.
"The central bank's stance is definitely toward easing monetary policy given the risks to growth from the global environment," said Saad Khan, an economist at Arif Habib in Karachi.
- Bloomberg
DANGER SIGNS
Thailand
* Expected to cut borrowing costs today.
* Industrial output down and growth rate cut to 1.7 per cent to 2 per cent from 2.6 per cent.
* Worst flooding in 70 years.
Philippines
* Some analysts expect it to cut rate tomorrow.
* GDP increased less than expected in third quarter and exports dropped 13 per cent.
* Tropical storms have hurt farming.
Pakistan
* Central bank has lowered borrowing costs by 2 percentage points since July.
* Economic growth, at 2.4 per cent, is the slowest in a decade.
* Floods in August forced more than one million people from their homes and killed more than 400 in Sindh province.
