The global GDP was projected to grow a paltry 0.9% in 2009, the Fitch Ratings said Wednesday. The global slowdown had pulled down Asian economies too and led to lower than expected growth in 2008, the agency pointed out. The slower economic growth was likely to impact banks profits and many banks could be faced with credit losses, the Fitch said.

The U.S. economy was expected to decline 1.2% in 2009, while the Euro area was anticipated to shrink 0.7% and economic growth in Japan was likely to slide 1.7%. All the three regions were projected to recover in 2010 with an average of growth of 1%.

Asian economies were expected to perform better in 2009. China was likely to post 6% growth, while India was projected to grow at 5%. These rates are low given the higher growth trajectories witnessed by these countries in recent years. China was projected to grow 8.5% in 2010 as external demand recovered and the internal stimulus package started to work. India was anticipated to grow at 6.3% in 2010.

In 2009, Fitch saw Indonesian economic growth at 4.3%, while Vietnam was projected to grow 3%. Philippines economic growth was pegged at 2.5%, while Malaysia was likely to grow 1.5%. In contrast, the Korean economy was anticipated to decline 2.4% in 2009, while Taiwan was expected to shrink 2.1% and Thailand was forecast to slide 1.1%. Hong Kong GDP was anticipated to shrink 1.2% while Singapore GDP was likely to decline 1%.

This across the board slowdown would affect the position of banks, the Fitch said. The grim economic scenario, presaging lower revenues and profit levels may lead to higher non-performing loans and greater losses for banks. Such losses would need to be offset by additional capital, the Fitch said. In these circumstances, the balance of Asian banks Outlooks has shifted decisively toward Negative over the past year, the Fitch said. (RTTNews)