DAVOS, Switzerland- The global economic slowdown will affect Asia this year but the continent will remain the economic powerhouse of the world, led by China, India and Indonesia, the head of the Asian Development Bank said Wednesday.

Haruhiko Kuroda said that the bank expects Asian economies - excluding Japan, Australia and New Zealand - to grow by approximately 7 percent this year, down from about 7.5 percent in 2011 and 9 percent in 2010.

His slightly less rosy forecast was in sharp contrast to the gloomy International Monetary Fund announcement on Tuesday that it was cutting its forecast for global economic growth this year to 3.3 percent from 4 percent because of a slowdown in the global economy and the likelihood of a mild recession in Europe.

German Chancellor Angela Merkel insisted on Wednesday that Europe will remain an economic power only if it deepens the integration that has caused it so many problems. Without that, she warned the global elite gathered in the Swiss ski resort of Davos, Europe will remain little more than a pleasant vacation destination.

"The message is that we are ready for more commitment," Merkel said. If Europe doesn't integrate further, she said, "we will remain an interesting holiday destination for a long time, but we won't be able to produce prosperity for the people in Europe anymore".

In the past month, business leaders and academics say they have become increasingly confident that Germany - once its back is against the wall - will go along with measures to boost growth, and possibly save Europe from deeper crisis.

"We are starting to see signs of a shift in sentiment towards Europe," said Baudouin Prot, CEO of French bank BNP Paribas.

Kuroda said regional and domestic demand in Asia are still "fairly robust" though external demand is lower "so GDP growth is also slowing".

He said Asia has already been affected by the ongoing European financial crisis in two ways - through the withdrawal of credit in Asia by many European banks and financial institutions and a drop in trade, which will impact China because Europe is its largest export market.

Nonetheless, Kuroda predicted that China will continue to lead Asia's growth in 2012, expanding its economy by more than 8 percent, followed by India at between 7-8 percent and Indonesia at around 6.5 percent.

Niko Price, John Daniszewki, Pan Pylas and Edith M. Lederer contributed to this story.

Associated Press