US Credit Crisis, Rising Inflation Hang Over ASEAN Finance Ministers' Meeting.
Confronted with global inflation and a slowdown in the U.S., financial leaders from Southeast Asia gathered Thursday to discuss the implications for their nations and ways to limit the fallout.
Regional economic growth is likely to remain strong but slow a bit as a result of the subprime mortgage crisis in the U.S. and resulting market turmoil, said delegates to the annual meeting of finance officials from the Association of Southeast Asian Nations, or ASEAN.
The finance ministers from ASEAN's 10 member countries were to kick off their meeting on the central Vietnamese coast Thursday afternoon. They have few concrete proposals on their agenda, but will discuss ongoing efforts to integrate the region's economies.
During lower-ranking officials' meetings this week ahead of the finance ministers' gathering, the hot topic has been the possible impact from the U.S. credit crisis, sparked by a surge in defaults on risky mortgages. That has dramatically slowed growth in the American economy, a key export market for Southeast Asia. "Everyone's talking about the problems in the United States with the subprime mortgages," said Kwihwan Jun, senior economist at the Bank of Korea in Seoul. "There's concern about that."
But rising prices pose a greater challenge to the region, said Haruhiko Kuroda, president of the Asian Development Bank, who was attending the meeting. "The No. 1 challenge is inflation rather than the global slowdown," said Kuroda in an interview. "It has serious implications for poor people, who spend a larger portion of their income on food."
The World Bank has predicted that growth in developing Asian nations will slow by 1 or 2 points in 2008, to around 8.5 percent. ASEAN has not released any regional economic forecasts at the meeting, citing only a forecast that global economic growth was expected to slow to 3.8 percent this year from 4.9 percent last year. Asian stock markets have been hit hard by the credit crisis and countries across the region have been revising down their economic growth forecasts.
While the economic fundamentals in most countries across the region remain sound, it is not possible to completely insulate Asia from financial crises roiling other parts of the world, said Daniel Citrin, deputy director of the IMF's Asia and Pacific Department. "There will be some impact, but the underlying growth momentum in Asia remains strong," he said. "There is very little exposure to the subprime mortgage problems among Asian banks."
Citrin and others said the current global economic turmoil is unlikely to unleash anything like the Asian financial crisis of 1997-98, which battered economies from Thailand to South Korea. "The situation is completely different from 1997," Citrin said, stressing that the fiscal position of the region's banks is much stronger today than it was just before that crisis, which brought growth across Asia to a grinding halt.
ASEAN's members are Vietnam, Cambodia, Singapore, Indonesia, the Philippines, Thailand, Malaysia, Brunei, Laos and Myanmar. Delegates from China, South Korea and Japan are also attending the meetings, the 12th annual gathering of ASEAN finance ministers.
Confronted with global inflation and a slowdown in the U.S., financial leaders from Southeast Asia gathered Thursday to discuss the implications for their nations and ways to limit the fallout.
Regional economic growth is likely to remain strong but slow a bit as a result of the subprime mortgage crisis in the U.S. and resulting market turmoil, said delegates to the annual meeting of finance officials from the Association of Southeast Asian Nations, or ASEAN.
The finance ministers from ASEAN's 10 member countries were to kick off their meeting on the central Vietnamese coast Thursday afternoon. They have few concrete proposals on their agenda, but will discuss ongoing efforts to integrate the region's economies.
During lower-ranking officials' meetings this week ahead of the finance ministers' gathering, the hot topic has been the possible impact from the U.S. credit crisis, sparked by a surge in defaults on risky mortgages. That has dramatically slowed growth in the American economy, a key export market for Southeast Asia. "Everyone's talking about the problems in the United States with the subprime mortgages," said Kwihwan Jun, senior economist at the Bank of Korea in Seoul. "There's concern about that."
But rising prices pose a greater challenge to the region, said Haruhiko Kuroda, president of the Asian Development Bank, who was attending the meeting. "The No. 1 challenge is inflation rather than the global slowdown," said Kuroda in an interview. "It has serious implications for poor people, who spend a larger portion of their income on food."
The World Bank has predicted that growth in developing Asian nations will slow by 1 or 2 points in 2008, to around 8.5 percent. ASEAN has not released any regional economic forecasts at the meeting, citing only a forecast that global economic growth was expected to slow to 3.8 percent this year from 4.9 percent last year. Asian stock markets have been hit hard by the credit crisis and countries across the region have been revising down their economic growth forecasts.
While the economic fundamentals in most countries across the region remain sound, it is not possible to completely insulate Asia from financial crises roiling other parts of the world, said Daniel Citrin, deputy director of the IMF's Asia and Pacific Department. "There will be some impact, but the underlying growth momentum in Asia remains strong," he said. "There is very little exposure to the subprime mortgage problems among Asian banks."
Citrin and others said the current global economic turmoil is unlikely to unleash anything like the Asian financial crisis of 1997-98, which battered economies from Thailand to South Korea. "The situation is completely different from 1997," Citrin said, stressing that the fiscal position of the region's banks is much stronger today than it was just before that crisis, which brought growth across Asia to a grinding halt.
ASEAN's members are Vietnam, Cambodia, Singapore, Indonesia, the Philippines, Thailand, Malaysia, Brunei, Laos and Myanmar. Delegates from China, South Korea and Japan are also attending the meetings, the 12th annual gathering of ASEAN finance ministers.
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