In its latest report, the US investment bank has said that India and China are the only two countries in the Asian region where the economy is likely to grow during fiscal 1998.

Goldman Sachs has cited a widening credit crunch, higher risk premiums on regional debt and a slowdown in external demand as the factors for cutting its forecast of gross domestic product (GDP) growth in Asian nations, minus Japan.

While the bank left India's growth forecast unchanged at five per cent for the year, it predicted a 7.6-per cent growth in the Chinese economy which is still lower than the earlier prediction of 8.2 per cent growth.

In 1999, India and China are expected to record growth of 4.5 and 8.3 per cent respectively, Goldman Sachs said. It had predicted growth rates of 5.1 and 8.6 per centearlier.

At the other end of the spectrum, the bank predicted that Indonesia's economy will shrink by 18.5 per cent in 1998 while that of Hong Kong and Malaysia would witness lower growth in 1999 after declining this year.