SINGAPORE – Asian economies face a "rough ride" for at least the next year as weakening consumer demand from developed countries hurt the region’s exports, Singapore Prime Minister Lee Hsien Loong said Friday.

"The world is caught up in a financial storm, and dark clouds fill our immediate horizon," Lee said in a speech in Singapore. "The fear and panic gripping financial markets everywhere will take time to subside."

Asian stock indexes have plummeted this week along with their counterparts in the U.S. and Europe on fears turmoil in the financial system will spark a global recession. Japan’s benchmark Nikkei 225 index tumbled as much as 11 percent Friday while Hong Kong’s Hang Seng index was down more than 7 percent.

"Asian countries cannot avoid the impact of weakening U.S., European and Japanese economies," Lee said "We must prepare for a rough ride at least over the next year, and quite possibly longer."

"The crisis in the financial system will dampen consumption and investment in the developed countries and affect growth all over the world," he said.

Singapore’s economy, which relies heavily on exports, contracted 0.5 percent in the third quarter, the government said Friday. The government also said it cut its 2008 forecast for economic growth to 3 percent from between 4 percent and 5 percent.

The central bank, known as the Monetary Authority of Singapore, said in a statement Friday it shifted it’s foreign exchange policy to a "zero percent appreciation" of the Singapore dollar from a "modest and gradual appreciation" in a bid to boost the competitiveness of the country’s exports.

Lee’s comments contrast with the more upbeat outlook offered by Asian Development Bank Haruhiko Kuroda on Thursday, when he said Asia’s financial system appears to be little affected by the U.S. sub-prime mortgage problems and that Asia overall will enjoy robust growth.

"The impact on the financial sector in Asia is limited this time," ADB President Haruhiko Kuroda told a news conference in Tokyo Thursday. "We expect a fairly robust growth to continue, although we expect the growth rate would be smaller."