Global deflationary trends will prevail and Asian superpowers will not escape the financial downturn ahead, international affairs expert Bill Emmott said on Friday.

Speaking to members of the Economic Club of Toronto, Emmott, a former editor of current affairs weekly the Economist, said drastic drops in the prices of oil, copper and other commodities have proven to have worldwide implications, and Asian countries are not exempt.

“Deflation is going to win. Inflation was a temporary and false fear,” Emmott said. “That is true both in Asia and on a worldwide level.”

He pointed to the fact that financial market turmoil, which originated in the U.S., has been felt more acutely on certain global markets than in North America. Stock markets in Russia and China, for instance, have plunged more than 60% in the past year, Emmott said.

While he admitted that there is not yet extensive data giving evidence of slower growth in Asian countries, Emmott said a number of indicators suggest this trend is coming. Softening demand for steel, for instance, is a reflection of less housing construction in China.

“This is something that’s global, it is something that’s being transmitted through the commodity price markets, and it is something from which there’s no actual hiding place,” he said.

But despite slowing growth in Asian countries, Emmott still expects the region to outperform the rest of the world in the difficult months ahead.

China, in particular, is in a position to continue experiencing economic growth going forward, thanks to a government surplus and some shelter from global financial woes, Emmott said. Since the country’s banks are state owned, they participate less in the global banking system than those in other countries, and are therefore less vulnerable to international financial turmoil.

India’s economy faces more vulnerability to the global downturn since it imports more global capital, and its banks are more connected to the global economy, Emmott said.

“India is going to suffer more in this situation than China is,” he said, adding that India’s economic growth could fall from 9% to well below 7%.

But with labour costs that are much lower than China’s, Emmott expects India to soon experience a takeoff in manufacturing that will boost the country’s economy.

Emmott said the level of demand from these countries will be a major factor determining inflationary trends ahead. Given indications of softening demand, however, Emmott said prices are likely to continue falling. He argues that the price of oil is more likely to fall to US$35 per barrel than rise to US$100 per barrel in the current economic environment.

Overall, although China and India are set to outperform the world during this rough patch, Emmott said this phenomenon is not indicative of a shift of power from the West to the East.

“China and India are too poor and too weak to seek to exploit that sort of shift,” he said.

But he admits the current turmoil could impact the dynamic of international relations.

Specifically, Emmott expects to soon see greater protectionist measures for trade in the United States, but the opposite for capital flows. “I suspect capital protectionism will in fact decline, because of the desperation to get that capital,” he said.