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Latin America, Asia ministers to look at market turmoil

23 august 2011, 15:00
Argentina's Foreign Minister Hector Timerman. ©Reuters
Argentina's Foreign Minister Hector Timerman. ©Reuters
Foreign ministers from Asia and Latin America, which together account for nearly a third of the global economy, will look at how to weather market turmoil when they meet this week in Argentina, AFP reports.

Trade in Latin American raw materials and Asian goods has risen steadily between the two sides, but the ministers will likely keep an eye out for headwinds from the rest of the world during the biannual talks.

Global stocks markets have been fluctuating wildly and uncertainties have been growing about the sovereign debt among the wealthy economies of the United States and Europe, raising fears of a new global slowdown or even recession.

"There may be another global recession, but it may not necessarily be deep," said Argentine economist Claudio Loser, a former top official at the International Monetary Fund.

"The United States is facing political problems that have economic consequences while in Europe, there are economic problems with political consequences," Loser said. "There may be a spillover effect to other regions."

The Forum for East Asia-Latin America Cooperation includes 18 Latin American and 16 Asia-Pacific nations. Technical talks start on Tuesday, with the meeting winding up on Thursday.

Trade between Asia and Latin America has quadrupled over the last 10 years, which marked the largest increase in trade between two major regions over that period of time, according to official figures.

But the prospect of slower growth in emerging giants China and Brazil would affect countries on both sides of the Pacific, said economist Rodrigo Alvarez of the consulting firm Ecolatina.

China, the world's second largest economy, has sealed deals across Latin America in the past decade for raw materials for its products.

By 2013, China is set to surpass the European Union as the main destination of exports from Latin America in 2013 -- and also to become Latin America's largest investor, according to a report by the UN Economic Commission for Latin America and the Caribbean.

China is already the main destination for exports from Brazil and Chile and the second most important export market for Argentina, Peru, Cuba and Costa Rica, according to the commission.

"I think the key player in all this is China, and we must follow closely what is happening with the Asian giant," said Guillermo Wierzba, director of the Buenos Aires-based Center of Economics and Finance for Development.

Argentine Industry Minister Debora Giorgi warned there could be clouds on the horizon.

"Countries like China and other Southeast Asian nations could adopt a more aggressive trade stance because there will be a surplus of unsold goods as a result of the crisis that they would want to export," Giorgi said.

China has faced pressure from the United States, Europe and Japan to let its currency appreciate, with the wealthier economies saying that the cheaper yuan artificially supports cheap Chinese exports around the world.

From the Latin American side, the forum includes Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, the Dominian Republic, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

The Asian side is represented by Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam.

By Daniel Merolla

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