Asian, European finance ministers see economic recovery ahead

Asian, European finance ministers see economic recovery ahead

Leigh Thomas, Agence France-Presse, Copenhagen

Asian and European finance ministers were optimistic Saturday about a global economic recovery later this year, while backing closer economic and financial cooperation in Asia for which European integration could serve as a model.

Ministers and representatives here for the Asia-Europe Meeting (ASEM) of finance ministers, hosted by Denmark, agreed that a gradual economic recovery had taken hold and would "accelerate gradually in the second half of this year", according to a statement at the end of the meeting.

Danish finance minister Thor Pedersen, whose country took over the European Union's six-month revolving presidency at the beginning of the month, told a news conference that Asian countries would enjoy economic growth rates higher than those seen in the European Union.

But the pace of reform in the shaky Japanese economy, the second biggest in the world, remained a source of concern.

The statement said the ministers had urged "the Japanese authorities to press forward with the implementation of (its reform) program, in particular with reforms in the financial sector and in the fiscal and structural fields".

European economic and monetary affairs commissioner Pedro Solbes explained that economic recovery in Europe would not be derailed by a weakening dollar, though the U.S. currency's recent decline in value against the euro could have "a certain impact on exports in the short term".

But in the medium term a stronger euro was a positive development, Solbes said.

Denmark's Pedersen, whose country is not part of the euro zone, explained that with the introduction of the single currency, Europe had "made a huge leap forward" towards greater economic, financial and monetary cooperation, noting that Europe's experiences were a "model for Asia".

"In Asia we have seen the start of cooperation," he said, although earlier on Saturday European Commission President Romano Prodi, speaking in Singapore, warned Asia countries that the road towards a common currency was long and the challenges were enormous.

However, the finance ministers also said that there was not only a need for greater cooperation within Asia but also between Europe and Asia on economic and financial matters.

Better coordination was particularly necessary to prevent terrorist financing and money laundering.

Pedersen suggested that people involved in large-scale capital movements ought to be registered in order that authorities can better track flows of money around the globe.

But greater monitoring of capital flows would not only help to shut out terrorists and money launderers from the global financial system, but it would also help avoid financial crises.

The statement said that the ministers had "urged continued improvements in public disclosures by hedge funds to strengthen market discipline and reduce systemic risk".

Hedge funds have come under fire recently for their speculative investments that can cause extreme volatility on markets.

The meeting, intended to prepare for a fourth ASEM summit, to be held here in September, was being attended by delegations from the 15-EU member states and 10 Asian nations as well as by representatives of the Asian Development Bank, the International Monetary Fund, the European Central Bank and the European Commission.