ASEAN pledge 'timely' action on inflation

ASEAN pledge 'timely' action on inflation

Southeast Asia's finance ministers pledged "timely" action to curb inflation, a sign some may embrace stronger local currencies to restrain rising energy costs.

Ministers "recognize the need to manage any downside risks," to growth, they said in a joint statement in Vientiane, Laos, where they met earlier on Wednesday.

"Appropriate and timely policy adjustments would be considered in view of, among others, potential build-up in inflationary pressures, higher global oil prices, market volatilities as well as growing imbalances," it added.

Economic growth among the 10-member Association of Southeast Asian Nations will slow this year from 6 percent in 2004 as flagging global demand trims exports, the statement said.

In Indonesia, Southeast Asia's largest economy, the central bank on April 4 raised a key interest rate by a quarter-point to 7.25 percent after surging oil prices drove inflation to 8.8 percent in March, the highest in at least 26 months.

Thailand will add to its four interest-rate increases since August, central bank Governor Pridiyathorn Devakula said in an interview on March 29.

Rising interest rates threaten to curb economies already experiencing a slowdown in electronics demand as soaring energy costs pare spending in the U.S., the largest overseas market for most Asian nations.

Malaysia's economy may expand as little as 5 percent this year compared with 7.1 percent growth, a four-year high, in 2004. Thai growth may slow to 4.7 percent this year from 6.1 percent in 2004, the University of Thai Chamber of Commerce said March 22.

Singapore expects growth to slow to as little at 3 percent from 8.4 percent.