SINGAPORE - Asia's economic growth probably troughed in the first quarter but a bounce-back may be muted, a Reuters poll showed.
Although the fear factor has faded over Europe's debt crisis and a slowing U.S. economy, both will still be a drag on growth rates in the region.
Respondents in a quarterly survey of over 250 economists refrained from slashing growth forecasts for the first time in a year, a sign that the outlook for Asia is certainly upbeat even though it may be too early to celebrate.
"Confidence is slowly crawling back in", said Frederic Neumann, co-head Asian economics research at HSBC.
"We have seen in China much more aggressive action been taken to support growth, China clearly remains the regional engine, plus the financial risks we saw emanating from Europe last year have also started to dissipate."
While powerhouses China and India will not have the double-digit growth seen before the global financial crisis, both economies will rebound in 2013, supported by policy easing, robust domestic demand, reviving exports and a stabilisation in the long-drawn European debt crisis.
"The first quarter has seen the bottom in growth, things are stabilising, and will possibly re-accelerate over the next few quarters with the region likely to hit its full stride in the second half of the year," added Neumann.
Expectations for growth in China have not budged since the last poll in January, an encouraging sign after economists consistently downgraded their outlook in the last three polls.
Asia's largest economy is expected to grow at an annual 8.4 percent this year and 8.6 percent in 2013.
China had reported its slowest quarterly growth since the tail-end of the financial crisis in the March quarter and the poll shows that was probably the trough and the economy will rebound in the coming quarters.
For India, analysts expect growth to touch 6.8 percent this fiscal year and 7.1 percent in the next which was slightly lower than the 7.0 percent and 7.3 percent in the January poll.
The survey, which covers 13 economies across Asia, showed analysts trimmed their growth expectations for Australia, New Zealand, Philippines, South Korea, Taiwan and Vietnam.
On the other hand the outlook for Singapore, Malaysia and Thailand had brightened, when compared to the last survey.
Growth for all economies polled is expected to be faster in 2013 than 2012, the sole exception being Thailand.
Asian economies will remain on track for growth and could even pick up pace later this year as long as global conditions do not deteriorate rapidly.
"The past two and a half years have taught us that Asia does not need strong growth in the G3 to grow fast itself. All Asia needs is the absence of negative growth and it will do just fine," said David Carbon at DBS in Singapore.
He added domestic demand had kept growth alive even when exports petered out in 2011, so if conditions in Europe improved, the region will see rapid growth.
Central banks will continue to try and walk the tightrope between growth and inflation with most expected to hold or start hiking rates towards the year-end, the survey showed.
"The trouble with this very benign outlook for growth in Asia is that price pressures are still bubbling away under the surface and with growth picking up they will likely break through," said Neumann.
India, which was the latest central bank in the region to ease rates, is an exception to this view, with economists predicting another 50 basis point cut in the repo rate to 7.5 percent by December and to 7 percent by June 2013.
While the People's Bank of China may leave lending rates untouched, it will ease liquidity and opt for selective easing targeted at smaller firms which require the most support.
In Indonesia, economists have scaled back their expectations for an interest rate cut as the recent fuel subsidy may push the inflation rate higher.
"The big story for 2012 is not necessarily going to be the collapse of growth but rather how quickly inflation comes back as these economies pick up steam," said Neumann.