DAVOS. Switzerland. Feb 1: The Asian crisis will shave Just 0.5 per cent off US growth prospects this year, and in Europe the impact will be even less. Dresdner Bank board member said here yesterday, reports AFP._

There Is no recession loom-" ing given the strong performance in the USA and the accelerating economic activity in most of Europe," Ernst-Moritz Lipp, member of the BOARD of Managing Directors of Dresdner Bank said at the annual world economic forum here.

"If growth in the regions considered is less than previously expected, it will largely not be attributable to the Asian crisis." .

Although Asian countries will have to cut Imports from the European Union and the United States, the Impact on trade will not be significant.

European exports to the most several affected countries — South Korea. Indonesia. Thailand. Malaysia and the Philippines — made up Just 2.5 per cent of total European ex--POrts In 1996, he said.

A worsening of Japan’s economy Is the biggest problem, he said, since 6.9 per cent of European and 19.2 per cent of American exports are shipped to the country.

Lipp played down the negative Impact of vastly cheaper Asian currencies on the US trade balance. Even if imports from Asia into the EU and the United States rise by half on a US dollar basis ana fully substitute for domestic production, this would reduce their GDP by 0.3 per cent and 0.45 per cent respectively.

"Again . Japan is the factor to watch" as a prolonged weakening of the yen could damage growth in the west, he said.

The fragility of the banking' system in Asia could spill over into western banking networks, he said.

But "for the timebeing fortu-~ nately we live in a very favourable financial environment. A global liquidity squeeze is nowhere in sight since inflation is fairly moderate in most of the industrialised world." ..

The capital bases of European and US banks were strong enough to absorb conceivable losses from Aslan business.

"With the efforts undertaken by official and private creditors. it is highly unlikely that the crisis poses a systematic risk any longer."

Talk of global deflation was" not very helpful, he said.

We should be happy that inflation has come down so far and not talk of the threat of a deflation right away."

A distinction should be made between deflation in some asset prices — equity and properly in particular within Asia— and product prices.