Market turmoil tops Apec agenda
Friday, August 3, 2007
VOLATILITY in global share and currency markets dominated early talks at a meeting of Asia Pacific finance ministers that opened in Australia yesterday, Australia Treasurer Peter Costello said.
The Asia Pacific Economic Cooperation (Apec) finance ministers moved discussions on topics such as energy security down their agenda to examine the market turmoil, Costello said.
"There are obvious instabilities in the global economic scene at the moment; we've seen it recently on equity markets, we've seen it on currency markets," Costello told reporters after yesterday's initial round of talks.
"A topic for discussion at this meeting is how to deal with this instability, what can be put in place to ensure that these imbalances don't work out in an even more radical readjustment."
Costello said the 21 ministers at the two-day meeting discussed what role Apec could play in sharing experiences on coping with market volatility, including lessons learned from the Asian financial crisis a decade ago.
"It's timely that we're here 10 years later to discuss the lessons learned from that collapse and to ensure that we cooperate together to avoid global imbalances affecting the region in an adverse way," he said.
Costello played down recent falls in equity markets sparked by concerns about the US subprime mortgage market, pointing out that while the Australian market plunged five per cent in the past week, it was still up seven per cent for the year so far.
"Corrections happen on stock markets. Stock markets are not a one-way bet, people should know that," he said.
The International Monetary Fund (IMF) said it predicted a correction in credit markets some months ago and the recent turmoil would not force it to lower its global economic outlook.
IMF deputy managing director John Lipsky said the organisation stood by a forecast last week that upgraded its global growth outlook for this year and 2008 from 4.9 per cent to 5.2 per cent.
Lipsky said the turmoil reflected a market that was becoming more risk averse.
"Market discipline, when it arrives, is almost inevitably uncertain in terms of timing, somewhat uneven in terms of impact and to the outside observer inevitably appears a bit messy," Lipsky said.
"But in the broader sense it tends to be effective ... it has not led us to think that we need to rethink our broader outlook."
Lipsky did concede that the sharemarket reaction was a potential threat to the world economy.
"We do perceive the risks to the economy are on the downside. The increase in financial volatility and the increase in energy prices have added to the risk," he said.
"Even though our broader outlook remains very favourable, we are not trying to say there are no problems in the economy; we are saying the risks are balanced to the downside and we will be watching that carefully."
AFP
The Asia Pacific Economic Cooperation (Apec) finance ministers moved discussions on topics such as energy security down their agenda to examine the market turmoil, Costello said.
"There are obvious instabilities in the global economic scene at the moment; we've seen it recently on equity markets, we've seen it on currency markets," Costello told reporters after yesterday's initial round of talks.
"A topic for discussion at this meeting is how to deal with this instability, what can be put in place to ensure that these imbalances don't work out in an even more radical readjustment."
Costello said the 21 ministers at the two-day meeting discussed what role Apec could play in sharing experiences on coping with market volatility, including lessons learned from the Asian financial crisis a decade ago.
"It's timely that we're here 10 years later to discuss the lessons learned from that collapse and to ensure that we cooperate together to avoid global imbalances affecting the region in an adverse way," he said.
Costello played down recent falls in equity markets sparked by concerns about the US subprime mortgage market, pointing out that while the Australian market plunged five per cent in the past week, it was still up seven per cent for the year so far.
"Corrections happen on stock markets. Stock markets are not a one-way bet, people should know that," he said.
The International Monetary Fund (IMF) said it predicted a correction in credit markets some months ago and the recent turmoil would not force it to lower its global economic outlook.
IMF deputy managing director John Lipsky said the organisation stood by a forecast last week that upgraded its global growth outlook for this year and 2008 from 4.9 per cent to 5.2 per cent.
Lipsky said the turmoil reflected a market that was becoming more risk averse.
"Market discipline, when it arrives, is almost inevitably uncertain in terms of timing, somewhat uneven in terms of impact and to the outside observer inevitably appears a bit messy," Lipsky said.
"But in the broader sense it tends to be effective ... it has not led us to think that we need to rethink our broader outlook."
Lipsky did concede that the sharemarket reaction was a potential threat to the world economy.
"We do perceive the risks to the economy are on the downside. The increase in financial volatility and the increase in energy prices have added to the risk," he said.
"Even though our broader outlook remains very favourable, we are not trying to say there are no problems in the economy; we are saying the risks are balanced to the downside and we will be watching that carefully."
AFP
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