Europe’s fiscal austerity steps should not affect growth: India

Bangkok: India on Monday said the fiscal austerity measures adopted by Europe should not affect growth as a slowdown could lead to repercussions affecting economies around the world.

Finance Minister P Chidambaram told a gathering of Finance Ministers from Asia and Europe here that fiscal prudence, coupled with liberalised trade and investment into major economies of Asia, would benefit all.

Chidambaram's remarks in an intervention came during the day long 10th ASEM Finance Ministers meeting here. After reviewing the economic situation in Asia and Europe, finance ministers and officials from the two continents on Monday decided to set up a working group for suggesting ways for enhancing trade and investment.

Speaking at a press conference, European Commission Vice President Olli Rehn attributed the slowdown in world trade to "creeping protectionism" among other things. He said world trade had slowed recently on account of micro economic conditions and also "creeping protectionism".

"We should not give in to any further protectionism, the best way would be conclude Doha round of trade talks under the WTO," he added.

The ministers and officials also discussed the importance of Europe implementing medium-term crisis resolution to reduce volatility of financial markets.

Asia and Europe need to create more investment and employment opportunities to combat economic troubles, as a spark of crisis in one area could cause turmoil in the other region of the world, Thai Finance Minister Kittirat Na-romang said on Monday.

"We shared views on regional financial arrangements in Asia and Europe and also exchanged views in lessons learnt in the Asia and Europe crisis," Kittirat Na-romang told media here after the morning session.