There appears to be a growing consensus that Asia can decouple from the US and other developed nations in the next few years, but Citigroup finds no evidence to support that.

Markus Rosgen, chief Asia strategist at Citigroup, writes in a recent report that the uniformity of the belief that decoupling is a given is bothersome because all the data suggests that we are still some years off.

ôThe potential for Asia ex-Japan to decouple over the next 20-30 years is very high, but over the next 2-3 years, sadly very low,ö Rosgen says.

Citigroup has looked at the decoupling angle in three ways û gross domestic product (GDP), imports and exports. In each case, the result they got is decoupling is highly unlikely.

ôAll the data suggests that inter-linkages have become stronger, not weaker,ö says Rosgen.

Return-on-equity in Asia ex-Japan suffered a bigger decline in the mild downturn in 2001 than in three of the prior US recessions.

Monetary policy decoupling has not yet happened û currency volatility versus the US dollar is still well below that of the yen or the euro. AsiaÆs main source of overseas capital, particularly foreign direct investments and portfolio inflows, is still the US. Asian currencies are also still managed floats.

Stock market correlations between Asia and the US and Asia and Europe are at all-time highs.

ôFar from decoupling, Asian markets have gotten more rather than less correlated to either the USA or the European markets,ö says Rosgen. ôThe potential for a decoupling of equity markets was much stronger and more likely back in the 1980s or 1990s than it is today given the correlation.ö

Citigroup doesnÆt have a bearish view of the US economy for 2008, expecting real GDP growth to come in at between 2.2-2.4%.