INTERVIEW-ADB sees Asia recovery in 4-6 quarters from downturn

By Surojit Gupta and Charlotte Cooper

NEW DELHI, Nov 17 (Reuters) - Asia will start to recover from the global downturn in a year to a year and a half and some of its economies have room for fiscal stimulus to boost consumption, a top official at the Asian Development Bank said.

Rajat Nag, managing director general at the ADB, told Reuters in an interview on Monday that next year would be a difficult year for Asia, but there was no need to be unduly pessimistic. "The recovery in the U.S. and Europe will certainly take time but in Asia we think it's about four to six quarters that we should start seeing coming back up again," Nag said.

ADB President Haruhiko Kuroda said earlier this month aggregate economic growth for developing Asia would decline by 1.5 percentage points this year from a record 9.0 percent in 2007 and decelerate a further 0.5 or 1.0 percent next year.

Nag said India would grow 7.8 percent this calendar year and 6.3 to 6.5 percent next year, well below the 9 percent annual rate seen in the past few years.

"But at the same time it's very important to remember that China and India will grow at fairly healthy clips. As a matter of fact, China and India will drive Asia's growth and Asia will drive global growth," he said.

Asia's financial sector was resilient, but he warned the financial crisis could see significant lay-offs in India.

Group of 20 leaders from major industrialised and developing nations called at the weekend for fiscal stimulus measures, either tax cuts or government spending, to boost the world economy and Nag said a coordinated response was appropriate.

"Coordinated does not mean identical and it cannot be," he said. "But overall Asia has room for greater fiscal stimulation. We can certainly push up our domestic consumption."