Asian GDP stronger than in the 70s: BOJ

Asian GDP stronger than in the 70s: BOJ

Asian economies are stronger today even with record high oil prices compared with the 1970s when they were hit by the last oil shocks, Bank of Japan Deputy Governor Toshiro Muto said.

"Some Asian currencies like the Indonesian rupiah came under pressure when oil prices reached record highs this August," he said in a speech in Tokyo on Monday.

"However, the economic fundamentals of most Asian countries are much stronger than in the 1970s when they were hit by the worst oil market turmoil ever."

Asian countries responded swiftly this time around by raising interest rates or slashing public fuel subsidies, he said. "These prompt actions have helped them minimize potential disruptions to their economies."

Surging oil prices may fuel global inflation, the Group of 20 industrial and developing nations said on Sunday, as policy makers including the European Central Bank's Jean-Claude Trichet and the U.S. Federal Reserve's Alan Greenspan weigh interest rate increases.

Central bankers are stepping up their inflation-fighting rhetoric as a 49 percent surge in oil prices this year prompts companies to raise prices.

Trichet said inflation may exceed the ECB's 2 percent ceiling in 2006, inching the bank closer to its first rate rise in five years.

Price risks "appeared to have increased," the minutes of the last U.S. Federal Reserve meeting released Oct. 11 said.

Ongoing reforms of the Chinese currency system could lead to substantial changes in the "monetary landscape" between Asia and the U.S., Muto said at the annual joint meeting of Japan-U.S. Southeast Association forum in Tokyo. -- Bloomberg