Despite severe difficulties facing the Asia Pacific Economic Co-operation (APEC) economies, the likelihood of an economic crisis like the one that swept the region in 1997 is slim.
Unlike the 1997 crisis that caught the region off-guard and sent many economies into deep financial troubles, finance ministers of the 21 APEC members are fully aware of the current difficulties, which are to some extent "a continuation of the contagion effect of the Asian crisis," said Jin Liqun, China's vice-minister of finance.
They're taking positive measures that have substantially reduced the possibility of a severe economic panic, he said.
"In 1997, there were fewer people aware of the impending disaster," Jin said. "This time, the ministers are fully prepared to deal with the challenges."
Jin declared this a "fundamental difference" while leading the Chinese delegation in the Eighth APEC Finance Ministers Meeting.
Finance ministers from the 21 APEC member economies as well as top officials from the World Bank, the International Monetary Fund and the Asian Development Bank (ADB) yesterday exchanged views on the world and regional economic situation and discussed measures to prevent the region from slipping further into an economic slump.
Despite the bleak outlook for the world economy this year, which turned bleaker after Japan revealed disappointing second-quarter data on Friday, finance ministers remained cautiously optimistic, Jin said.
"On the one hand, they're paying close attention to challenges faced by the region," he said. "On the other hand, they're very confident that they're capable of dealing with the challenges."
The two-day finance ministers meeting comes at a time of impossible-to-ignore difficulties.
Jin said the meeting was very timely as "the US economy continues to deteriorate, Japan's economy remains weak... and Asian economies, which are in the process of recovering from the financial crisis that broke out in 1997, are encountering new troubles."
Japan's gross domestic product fell 0.8 per cent in real terms in the April-June quarter from the previous quarter, its Cabinet Office said on Friday. The announcement aggravated worries at the finance ministers meeting, where policy moves to help the region are expected to emerge.
Finance ministers are faced with a wide-range of challenges in their mission to promote growth in the world economy. ADB President Tadao Chino called on officials at the ministerial meeting to work harder at industrial restructuring to avoid excessive competition, accelerate financial reforms, focus on the operational mechanism in corporate restructuring programmes and pay special attention to social security problems even as the slump rages on.
Yet ministers remained buoyant that the APEC region could be brought back on track soon with the backing of solid economies reformed by wise policymakers.
"The restructuring these economies have been experimenting with or undertaking will pave the way for sound macro-economic policies to deal with the challenges," Jin said.
US Treasury Secretary Paul H. O'Neill gave a boost to the confidence of his counterparts yesterday by saying efforts to adjust inventories were proceeding smoothly, and the housing and auto industries were still in good shape.
"He has given, I think, a very positive note to the US economic development or outlook based on the policies put in place to deal with the slowdown," Jin said.
Despite the poor second-quarter economic data on the world's second-largest economy, which already was mired in deep-rooted financial problems, Japanese Finance Minister Masajuro Shiokawa said Japan's economy should be able to stay above zero growth this year.
Jin said the ongoing meeting of APEC finance ministers would provide a platform for them to hammer out ways to combat economic difficulties better than they could in earlier crisis.
"Without these forums, it's very hard for ministers or higher level economic leaders to reach consensus," he said, dismissing skepticism that APEC, spanning from highly industrialized economies like the US to the impoverished Papua New Guinea, is merely an insubstantial media show.
"We are very happy about the development of the meeting," Jin said.
Among the substantial results, agreement was reached among finance ministers yesterday that the economic fundamentals are robust despite the adverse impact of the global slowdown. APEC economies should strengthen co-operation, promote dialogue on macroeconomic issues and stick to its commitment to restructuring and reforms in order to revitalize the regional economy, the vice-minister went on.
"This can send a strong signal to the market that the finance ministers are dealing with the problems and are confident we can solve the problems," he said.