Singapore would benefit the most from sustained growth in its neighbours, where falling inflation has created room for monetary easing, said Rob Subbaraman, senior Asia economist with the investment bank.
"We are generally positive on Southeast Asia. The reason is that there have been more structural reforms in recent years in Southeast Asia than Northeast Asia," Subbaraman told reporters in Singapore.
"In addition to that, inflation now has come down in most of these countries." Most Asian governments had managed to cut back their public debt in recent years thanks to strong growth, paving the way for them to step up spending to offset slowing exports, he said.
Lehman forecasts Asia ex-Japan will see economic output rising by 7.7 % in 2007, lower than the estimated 8.2 % growth in 2006.
Most of these economies would expand at a slower pace than in 2006, with the exception of India, Indonesia and the Philippines, it said.
Singapore's growth would slow to 5 % in 2007 from an average 7.6 % in the past three years, Lehman forecast. The government has predicted 4-6 %. "Singapore has rock-solid economic fundamentals and is well positioned to be a key trade entrepot and financial hub for the Southeast Asian region, whose economies are starting to shine," Lehman said.
Subbaraman said Asia's growth outlook still hinges on the health of the US economy, with more exports now going through China, which has become a global manufacturing hub.
"The region is still very dependent on the end-demand from the United States and Europe," he said. Taiwan and South Korea were likely to feel the pinch of a US slowdown more than their neighbours, given their export-dependent economies, he said.