Asian finance ministers’ meet to discuss inflation, growth

Japan’s Fukushiro Nukaga, China’s Xie Xuren, South Korea’s Kang Man Soo and Southeast Asian ministers are meeting at the sidelines of the Asian Development Bank’s annual gathering in Madrid this weekend. Inflation in Asia is expected to reach a decade-high this year even as economic growth cools, ADB predicts.

“Inflation will be pushed to the fore over global growth concerns,” said Tetsuo Yoshikoshi, an analyst at Sumitomo Mitsui Banking Corp. in Singapore. “There’s little Asia can do to avoid a global slowdown but cooperation to contain inflation, especially on food prices, is possible.”

Vietnam and other rice-producing nations have curtailed exports to maintain supplies and damp local inflation, pushing up prices for buyers such as the Philippines, the world’s biggest importer of the grain. Corn, wheat and soybean prices have all reached records this year too.

Asian governments are predicting growth to be at the lower end of targets, or are reducing their forecasts even as they increase their estimates for inflation.

The Bank of Japan on April 30 said the world’s second- largest economy will probably expand at a slower pace this year than it had expected six months ago, while almost tripling its forecast for core consumer prices. Indonesia lowered its growth estimate on the same day, and South Korea has said its economy entered a “downturn.”

Finance ministers from China, South Korea and Japan will gather for a meeting on May 4, before getting together with their counterparts from the 10-member Association of Southeast Asian Nations. Besides inflation and the outlook of the region’s economies, issues that will be discussed include the pooling of foreign-exchange reserves and the development of bond markets.

Officials last year agreed to set aside part of their $3.4 trillion of foreign reserves to be tapped by member nations when needed, an expansion of a current arrangement that only allows for bilateral currency swaps.

—Bloomberg