Finance ministers from 25 Asian and European countries have warned that risks to the global economy have increased, in particular the slowing US economy.
After the Asia-Europe Meeting (ASEM) yesterday, finance ministers said that while growth prospects have improved and inflation is under control they will continue to take measures to reduce their vulnerability to external shocks.
In a statement, the ministers said developments in recent weeks confirmed that the economic outlook was now less favourable due to economic and financial imbalances in the global economy and a slowdown in the US economy.
France's Finance Minister, Mr Laurent Fabius, said the most striking aspect of the meeting was the degree of uncertainty about the US economy.
Referring to slowing growth and the change in administration, Mr Fabius said: "I don't know if it's a problem. It is clear that a landing is taking place, the question is whether it is hard or soft. Obviously, all of us want it to be soft but it is not easy to manage and we are really keen for the new administration to take decisions to have a soft landing."
Ministers were also cautious about the Japanese economy, the world's second-largest, as it struggles to shake off a decade of sub-par growth after its asset bubble burst in the early 1990s.
The statement noted that Japan's recovery had been only modest and further deep-seated reforms to the fabric of the financial and corporate sector were needed to put it back on track for self-sustaining growth, which it said was important for the rest of Asia.
Mr Fabius said that while Japan would perhaps not contribute as much to world growth as could have been expected, he did not see it as posing a real risk to the Asian or global economy.
France gave its backing to Japan's call for countries to adopt a managed float of their currencies, which would entail steering their value according to a basket of currencies of their main trading partners.
The statement concluded that no single arrangement is necessarily right for all countries all the time. The key lesson of the currency crisis that ravaged Asia in 1997 and spread to Russia and other emerging economies was that, whatever regime is adopted, governments must follow sound economic policies.
"The experience of recent years suggests that countries now face a much higher risk of financial crisis if they choose an exchange rate regime that is not backed by coherent and appropriate macroeconomic and structural policies." While specific discussion of exchange rates did not take place, European officials were upbeat on the euro, saying it could soon reach parity with the dollar as it reflected relative economic fundamentals for the first time in a long time.
Ministers had been impressed by the US Federal Reserve's half of one percentage-point cut in interest rates, but were not convinced that the European Central Bank should follow suit.
