EU, Asian ministers meet against economic backdrop

EU, Asian ministers meet against economic backdrop

By Andrew McCathie

BERLIN (DPA): European Union and Asian economic ministers are meeting in Berlin next week against the backdrop of an improved economic outlook for both regions.

Two years after a financial firestorm swept through Asia economic growth in both the EU and the Asian-Pacific region is beginning to pick up speed with Asia's brighter economic prospects helping to drive rising European exports.

As further evidence of the economic turnaround taking hold in Japan, exports to Japan from Europe's largest economy, Germany have been growing this year at about five percent, after plummeting last year by 15 percent.

This week's Asia Europe Meeting could also represent something of a curtain raiser to a renewed European interest in the Asian region with German Chancellor Gerhard Schroeder due to lead a big German business delegation to both Japan and China in November.

German officials say that trade issues are likely to dominate the two-day meeting in Berlin, which will include ministers from the EU's 15 member states as well as from 10 Asian nations -- Japan, China, South Korea, Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.

More specifically, the ministers are expected to discuss means of boosting regional trade and investment as well as the upcoming Seattle round of trade liberalization talks and other World Trade Organization (WTO) questions.

Also on the agenda are initiatives aimed at improving cooperation both between Asian and European companies and in particular in developing infrastructure.

As well, in the light of the improving fortunes of the global economy, a review of the economic situation in both regions.

Nevertheless, and despite the growing economic optimism about Asia, the mood in the European business towards Asia remains cautious ahead of the meeting with the upturn in the Asian economy seen as being helped along by the resilience of the U.S. economy.

While economic growth in the new EuroZone economy built around Europe's common currency, is expected to come in at a modest 2.1 percent this year, the economic rebound in parts of Asia means that growth in nations like South Korea could hit about six percent.

But signs of an economic upswing in Asia also come after almost two years of negative growth in several key Asian states.

And as a reminder of the fragile state of the Asian economy, data released this week by Germany's statistical office showed German exports to South Asia sinking by 19.2 percent during the first half of the year.

As the world's second largest exporter, Germany was especially hard hit by Asia's sudden economic slump with exports going into reverse towards the end of last year after chalking a growth rate of about 11 percent at the height of Asia's economic boom.

The eurozone economy's export exposure to Southeast Asia roughly stands at only about 10 percent, but as the last two years have shown, economic events in Asia still have the potential to depress European economic growth.

Moreover, after racing to carve out new business empires in what was once the booming Asian economy, the financial crisis that moved through Asia and on to Latin America and Russia during the last two years has forced western business leaders to redefine their approach to emerging markets. And in particular to weigh up the business potential of each market individually rather than on a regional basis.

This has been further underscored by the continuing economic and political turmoil ravaging Indonesia and which was once seen by European business as a prime example of Asia's market potential.