On the first day of the fifth Asia Europe Meeting (ASEM) hosted by Indonesia on the resort island of Bali, finance ministers and officials from 10 Asian countries and the 15 European Union states agreed to work together more closely in the financial sector and to reduce world poverty.
The closed-door talks included an update on the economic outlook, with a general feeling of optimism among delegates.
Asia is coming back, Philippines Finance Minister Jose Insidro Camacho said in an interview with AFP on the sidelines of the meeting.
There has been a slight pause but there’s growth momentum in Asia now and a general sense of cautious optimism across the board for the second half of this year and through to next year.
He said the priority was for ASEM members to work towards more open financial markets, stronger relationships, better governance and improved financial integrity.
German Parliamentary State Secretary Barbara Hendricks quoted World Bank figures forecasting Asia’s economy would grow at an average of around 5.9 per cent next year, compared to around 2.0 per cent for Europe.
The Asian economy is the fastest growing in the world, she said in an interview. While expectations for Europe’s economy are not as good, we expect growth will improve over the next year partly due to the diminishing impact of geopolitical forces.
In an opening address, Indonesian President Megawati Sukarnoputri said the challenge was for developed countries to help poorer countries relieve their debt burdens, while poorer countries must improve governance and transparency.
We need to put that challenge into real action; otherwise we will never reach our objective, she said in a statement read by top economics minister Dorodjatun Kuntjoro-Jakti.
Megawati had been scheduled to open the meeting but pulled out at the last minute due to unexpected circumstances.
Indonesia proposed the adoption of a Bali Initiative under which European and Asian countries would cooperate in training finance ministry and central bank staff, through internships, exchange programs, scholarships and training.
Meanwhile, while many observers fear the weakening US dollar will export deflation to Europe, Hendricks said Germany, which accounts for about 30 per cent of the euro area’s economy and is experiencing a fall in core inflation, was not worried.
We do not see any deflationary risks for Germany, or the whole of Europe, she said.
The recent 50 basis point interest rate cut by the European Central Bank is deemed sufficient to head off any potential deflationary pressure, she said.
We don’t expect any further cuts in the interest rate at this point in time, she said.
She added that while developed countries such as Germany — which is in a technical recession — were still struggling to overcome their own economic problems, it was important to maintain strong ties with their poorer partners.
Of the 15 EU member states, just three — Austria, Ireland and Spain — sent full ministers to attend this year’s meeting. Nine of the 10 Asian states represented sent full ministers.—AFP