Asia and EU likely to weather global slowdown, say ministers

By Rainer Buergin  |   2008-6-17  |     NEWSPAPER EDITION

ASIA and Europe are better placed than other regions to cope with the global economic slowdown, according to officials attending a meeting of finance ministers from the two continents in Jeju, South Korea.

The two areas "have good fundamentals to weather in better condition than others these difficulties," European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said yesterday.

French Finance Minister Christine Lagarde said the regions "were far more resilient than expected in the light of the international economic crisis."

Asian countries are turning to each other and oil-rich nations to make up for waning sales in the United States in the wake of the housing recession and subprime-mortgage crisis, said Bloomberg News.

In Europe, the euro's strength is damping the increase in the price of oil, and demand from the continent's emerging eastern half is keeping order books full in countries such as Germany.

The Asian and European officials said short-term economic prospects have "weakened" and that downside risks include a slowing US economy, tighter credit and mounting inflationary pressure driven mainly by rising commodity costs.

"Both Asia and Europe are currently less vulnerable and significantly more resilient to sharp external shocks than a decade ago," the statement said.

Growing intra-Asian trade has been compensating for slowing exchange between the US and Asia, Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development, said yesterday in Jeju.

"I think there might be some slowdown but not really one that's devastating," Panitchpakdi said with regard to trade. "Looking at the Asian economic growth on a general basis, at the moment I don't see much of a real impact" from the US slowdown.

German Deputy Finance Minister Thomas Mirow said ministers "see with a certain relief that Asia not only isn't the source of the crisis, but so far has even held up fairly well," alluding to the 1997 market turmoil that gripped parts of Asia.