Hong Kong-based broker CLSA has sharply cut its outlooks for South Korea, Taiwan and Singapore, saying their economies would shrink even more this year than during the Asian financial crisis a decade ago.

"Asia, having avoided the perils of too much leverage, is finding that its growth is vulnerable to the cessation of demand from the West," CLSA said in a research report.

The forecasts released yesterday are so far the lowest by any bank or broker for those three countries. The comments come a day after the International Monetary Fund underscored the dismal state of Asia's economies by cutting its growth forecast for the region to just 2.7 per cent from a November forecast of 4.9 per cent.

CLSA expects gross domestic product in South Korea, Asia's fourth-largest economy, to shrink by seven per cent this year, reflecting falling exports, consumption and investment. Its previous forecast was for 1.7 per cent contraction.

It expects Taiwan's economy to shrink by 11 per cent in 2009, making it the worst performer in Asia and saying it was "tying with Singapore as the most vulnerable economy in the region". Its previous forecast was for a contraction of 2.7 per cent.

Singapore will be hit by falling trade, declining property prices and its exposure to the financial industry, CLSA said, with GDP likely to shrink 10 per cent, down from its original forecast of a 2.6 per cent decline. CLSA maintained its previous growth forecast for China at 5.5 per cent. It lowered its view on Indonesia, predicting growth of less than one per cent.