Southeast Asian trade ministers shrugged off fears of a US recession on Friday and said the region's deepening ties with other economies would soften the blow from a possible downturn in the world's biggest economy.
Warnings from the head of Countrywide Financial, the largest mortgage lender in the United States, that the US housing downturn could push the country into recession, fanned renewed market jitters and knocked stock markets lower.
But Malaysia's Trade Minister Rafidah Aziz played down the warnings. "I don't think you can just take one person's view," she told a news conference in Manila. "But I'm surprised that that man is talking about recession in the US."
Three months before losses in the US subprime mortgage market roiled global markets, Alan Greenspan, the former chairman of the US Federal Reserve, said there was a one third chance the United States would slip into recession this year.
At that time, Greenspan said the impact of any US slowdown on Southeast Asian economies would be mitigated by their high savings and domestic consumption.
Trade ministers from the Association of Southeast Asian Nations (Asean), in Manila for an annual meeting, also pointed to increasing intra-Asian trade and the emergence of China and India as major economies as factors cushioning the potential impact of a US downturn.
"In the old days, the United States was a very big market," said Ong Keng Yong, secretary general of Asean. "Today, Asean has four major trading partners. "If you say recession in the US, it's only one out of the four parties."
Asean countries trade mostly with themselves, followed by Japan, the United States and the European Union, according to 2005 data. In a move to foster closer ties, ministers agreed on Friday a final blueprint for creating an Asean economic community by 2015 which would allow free movement of goods and services between the 10 member countries.
The document will be unveiled at a leaders' summit in Singapore in November but ministers warned against overestimating how deeply countries can integrate their diverse economies. Asean's 10 members range from the largely rural communist state of Lao with annual gross domestic product of around $3.5 billion and the booming city-state of Singapore whose output is nearly 40 times that. "The Asean economic community blueprint is not a magic wand that will transform us from ashes to ballroom elegance as in the Cinderella story," Philippine Trade Secretary Peter Favila said in his opening address.
Malaysia's Rafidah said Asean was not trying to emulate the EU, which was born just a decade before the Southeast Asian grouping and which has rapidly integrated to create a single market and a common currency. "I think it is wrong for anyone to compare Asean to Europe. We cannot use anybody's template to evolve this Asean economic community. We are a different entity altogether."