# Asian economic powers warn of risks from war, monetary policy normalisation
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-12
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: East Asian Economic Leaders Warn of Risks Amid Regional
Meta Description: East Asian economic leaders pledge commitment to stability amidst risks such as early interest rate hikes, inflation, supply chain disruption, and the war in Ukraine.
URL: https://financedigest.com/asian-economic-powers-warn-of-risks-from-war-monetary-policy-normalisationhtml

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By Tetsushi Kajimoto

TOKYO (Reuters) -East Asian economic leaders warned on Thursday of risks to the region’s outlook and pledged to remain committed to market stability and sound fiscal policy.

Economic risks included unexpectedly early rises in interest rates “in some advanced nations”, runaway inflation and supply chain disruption on top of the war in Ukraine, finance ministers and central bank governors said in a joint statement.

The statement followed annual meetings, held online, of the officials from China, Japan, [South Korea and the 10 members of the Association of South East](https://www.financedigest.com/pimp-my-ride-south-east-drivers-most-likely-to-modify-their-cars.html "Pimp my ride! South East drivers most likely to modify their cars") Asian Nations (ASEAN).

The Japanese, Chinese and South Korean officials affirmed their commitment to supporting [financial market](https://www.financedigest.com/the-political-wildcard-what-is-trumps-us-presidential-nomination-doing-to-financial-markets.html "The political wildcard: What is Trump’s US presidential nomination doing to financial markets?") stability and to long-term fiscal sustainability.

We [must remain on guard against heightening risks](https://www.financedigest.com/ecb-must-be-prudent-with-rates-hikes-as-recession-risk-rises-panetta.html "ECB must be prudent with rates hikes as recession risk rises: Panetta") to which the regional economic recovery is being exposed … on top of the ongoing Russia-Ukraine conflict and earlier-than-expected [monetary policy](https://www.financedigest.com/uks-ftse-100-dips-on-scope-of-tighter-monetary-policy-informa-jumps.html "UK’s FTSE 100 dips on scope of tighter monetary policy; Informa jumps") normalisation in some advanced nations,” it said.

These factors could become downside risks to the regional [economic outlook](https://www.financedigest.com/analysis-russians-feel-little-economic-pain-now-long-term-outlook-darkens.html "Analysis: Russians feel little economic pain now, long-term outlook darkens"), causing volatility to financial markets and capital flows.

The officials’ joint statement comes [amid concerns](https://www.financedigest.com/oil-prices-fluctuate-amid-supply-constraints-and-demand-concerns.html "Oil prices fluctuate amid supply constraints and demand concerns") that U.S interest [rate rises and related reduction in central bank assets have driven up the dollar](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high"). This has raised the prospect of capital flight from some emerging markets and a rising [burden of dollar-denominated debt](https://www.financedigest.com/analysis-twitters-massive-revenue-drop-adds-to-heavy-debt-burden.html "Analysis-Twitter’s ‘massive’ revenue drop adds to heavy debt burden") in the developing world.

The officials steered clear of references to currency market moves, notably rises in the [dollar and falls](https://www.financedigest.com/dollar-falls-to-nine-month-low-as-powell-notes-progress-in-disinflation.html "Dollar falls to nine-month low as Powell notes progress in disinflation") in the yen, or sanctions against Russia’s invasion of Ukraine, which Moscow calls a “special operation.

Instead, they underscored progress in regional initiatives, including a mechanism aimed at helping countries in [times of financial](https://www.financedigest.com/how-can-financial-services-companies-compete-more-effectively-in-times-of-uncertainty.html "How can Financial Services Companies compete more effectively in times of uncertainty?") distress, the Chiang Mai Initiative Multilateralisation currency swaps deal.

A deep divide has emerged within the Group of 20 (G20) major economies, which includes Western nations that have accused Moscow of [war crimes in Ukraine](https://www.financedigest.com/euro-zone-economy-sentiment-rises-in-dec-first-time-since-start-of-ukraine-war.html "Euro zone economy sentiment rises in Dec, first time since start of Ukraine war"). Other members – China, Indonesia, India and [South Africa](https://www.financedigest.com/inmobi-and-coca-cola-win-mma-smarties-south-africa-award-for-beat-can-campaign.html "InMobi and Coca-Cola Win MMA SMARTIES South Africa Award for Beat Can Campaign") – have not joined Western-led sanctions against Russia over the conflict.

ASEAN is chaired by Cambodia this [year and includes Indonesia](https://www.financedigest.com/amman-mineral-makes-firm-debut-in-indonesias-biggest-ipo-this-year.html "Amman Mineral makes firm debut in Indonesia’s biggest IPO this year"), which currently chairs the G20.

Japanese Finance Minister Shunichi Suzuki used harsher words than the joint statement in discussing the [invasion of Ukraine](https://www.financedigest.com/ukraine-asks-for-south-korea-cybersecurity-aid-amid-russia-invasion.html "Ukraine asks for South Korea cybersecurity aid amid Russia invasion").

Russia’s unjustifiable invasion of Ukraine has shaken the foundation of [international order and is a clear violation of international law,”](https://www.financedigest.com/international-law-firm-calls-in-viato-connect-uk-and-us-offices.html "INTERNATIONAL LAW FIRM CALLS IN VIATO CONNECT UK AND US OFFICES") Suzuki told reporters. It is having a serious impact on the global economy with energy and [food price](https://www.financedigest.com/world-food-prices-hit-record-high-in-2022.html "World food prices hit record high in 2022") rises, supply-chain disruptions, destabilisation of financial markets and increasing numbers of refugees.

(Reporting by Tetsushi Kajimoto; Editing by Christopher Cushing and Bradley Perrett)


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