>Recovery still looks strong (DANSKE MARKETS)

• The recovery in Asia looks increasingly sustainable. Across Asia unemployment is declining, property prices are increasing and manufacturing investments are rebounding sharply on the back of surging exports and industrial activity.

• In addition, growth in Asia has become more broad based with growth momentum currently strongest outside China and Japan. Our 2010 GDP forecast for India, Indonesia, South Korea and Taiwan has been raised, China is largely unchanged, while our forecast for Japan has been revised slightly lower.

• In Asia excluding Japan, GDP growth has overall been stronger than expected and the pace of the recovery is unlikely to ease in Q1 10. However, with the output gap closing fast, GDP growth is expected to gradually slow from Q2 10. In Japan, the recovery so far has been reasonably strong, but growth will slow substantially in Q1 10. However, a double-dip recession is unlikely in Japan.

• Inflationary pressure has started to emerge across Asia and, with the exception of Japan, inflation has increased more than expected. In Q2 and Q3 10, we expect most Asian central banks to start raising their leading interest rates and we expect China to resume its gradual appreciation of CNY in Q2. On the other hand, we cannot rule out further monetary easing in Japan.

To read the full report: RESEARCH ASIA