Asia, Europe Ministers Pledge Cooperation, Say World Economic Outlook Has Darkened
A WSJ.COM News Roundup
KOBE, Japan -- Asian and European finance ministers wrapped up two days of talks Sunday with an agreement to strengthen regional economic and monetary cooperation to prevent a recurrence of the currency crisis that jolted Asia in 1997 and 1998.
In a final statement, the finance ministers from the Asia-Europe Meeting said slower growth in the U.S. together with ongoing imbalances in the world economy have increased the downside risks to the global economic outlook.
Although long-term growth prospects for Asia and Europe have improved in the past two years and inflationary pressures generally remain under control, some dangers cloud the world's economic prospects, the finance ministers said in the statement.
"Developments in the recent weeks confirm that downside risks to the outlook have increased, particularly those associated with the continuing economic and financial imbalances in the global economy, and slowing of the U.S. economy," the statement said.
The ASEM ministers said they remain committed to taking continuing action to make their economies more robust and more resistant to external shocks.
They agreed to launch a project, proposed by Japan, to gather input on such medium and long-term issues as monetary collaboration and desirable currency regimes from private-sector institutions in the two regions.
The finance ministers also discussed volatility in oil prices. "They shared the view that ensuring a stable energy market was vital to the maintenance of long-term economic growth for all ASEM partners and the world at large," the statement said.
The ministers noted that the economic recovery in Asia "has continued to gather momentum." But it's important for Japan's economy to get on a sustainable recovery track, noting that more structural reforms in the financial and corporate are needed to achieve that goal, the statement said.
Europe's economy, on the other hand, has shown a strong recovery, with core inflation under control. The recovery was helped by resurgent export growth mainly due to the strengthening global recovery, the statement said.
The euro has been an important catalyst in stimulating structural reform in Europe and that should contribute to sustainable long-term growth. The euro "has gained its place among the main world currencies" and created a stable environment for the euro-zone, the statement said. "In particular, the euro has become the reference currency on international bond markets alongside the dollar."
The delegates also traded views on an appropriate exchange-rate regime for emerging market economies, especially in Asia, to avoid future crises and achieve sustainable growth. But they stopped short of reaching agreement on the joint proposal by Japan and France for a managed floating exchange-rate regime for emerging market economies in Asia to promote foreign-exchange stability.
"The choice of an appropriate exchange regime is important for emerging market economies to achieve sustainable economic development ...[But] no single arrangement is necessarily right for all countries all the time," the statement said.
Experience over the past two years has taught that exchange rate regimes must be backed up by appropriate macroeconomic and structural policies and strong institutional arrangements. "Countries seeking both to maintain a flexibility and to avoid excessive volatility in exchange rates might consider intermediate regimes such as band arrangements," the statement said.
The finance ministers called for the launch of a new round of multilateral trade negotiations as soon as possible.
The Asian members of ASEM are Brunei, China, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand and Vietnam.
The European members are Austria, Belgium, Britain, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the European Commission.
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