Transcript No. 2001/047

Asia indeed is in deep economic doldrums. Has been for a while. One of the

Pacific Finance Ministers attending the Washington conference is Australian

Treasurer, Peter Costello. Minister Costello is joining us from our Washington

bureau. Thanks for being with us. And Id like to begin, youre an old hand

at these conferences, I would like to begin with one of the rookies – this is

the first time that youre getting a look at Japans new Finance Minister.

What do you make of the proposals thats coming from the Koizumi Government?

Well, of course, I think the whole world will welcome moves that have been

put forward to reform the Japanese financial system. For some time now, the

Japanese economy has been in the doldrums. There have been numbers of attempts

to resuscitate it with fiscal stimulation. And the new Government seems as if it

is intent on really forcing through some restructuring. And to the extent that

they can be successful, that will be good for Japan, that will be good for the

region as well.

Has China come up much in the conversation so far?

China is an interesting case. Throughout the financial crisis of 1997-98,

China was actually quite a stable influence in the region. We welcome moves,

obviously, for China to open its markets and open its economies. It can provide

good growing markets for many of the traders in the region – including, of

course, Australia. It sells quite a bit into China. And positive moves for

economic development in China will also be very much welcome.

Has the dust-up with the United States affected the economic picture at all,

viz a viz China and its neighbours?

Obviously, that has been a serious diplomatic incident but it does not seem

to have affected the economic situation to date. Obviously, it is good if all of

the powers in the region understand each others aims and ambitions, and

clearly that will contribute to co-operation. But I think the key to growth is

going to be Japan. If the Japanese economy can restructure, and there has been a

lot of talk over the years, that is going to be a positive influence for the

whole of the region, and indeed for the world – Japan being the worlds second

largest economy.

How about Europe? There have been calls for Europe to cut its interest rates.

The United States has been critical of Europe. The IMF, in fact, has been

critical of Europe for not doing that. How does that affect the Asian economic

picture?

Well, it appears as if world economic growth generally is slowing,

notwithstanding some good results in the United States announced just yesterday.

With the United States coming off fast growth, with Japan still in the doldrums,

it would be nice to see a lot more growth coming out of Europe. Obviously Europe

is dealing with its own problems, still coming to grips with many of the issues

of monetary policy. But there are some positive signs coming out of some of the

European zone. The Bank, obviously, is focussed on keeping inflation low. It is

a matter as to how much they can take stimulatory activities whilst keeping its

inflation target under control.

I want you to put on your pundits hat for a minute, Minister Costello. Its

been a decade since weve heard nothing but talk about the Asian tigers and

their pre-eminence. As you look at it from your vantage point in Canberra, what

countries are doing the best, what countries need work?

Well, I think Korea has been one of the countries that has bounced back

strongly from the crisis of 1997-1998. Korea is one of the larger economies in

the region. Very important from Australias point of view, too, to see Korea.

It is one of our major trading partners. I think some of the other countries –

obviously there is a lot of restructuring to be done in Thailand, which was the

first crisis-affected country, there is still restructuring going on. Indonesia

is currently suffering from a lot of political difficulty with some of the moves

that are going on between the President and the Parliament at the moment, so

there is a lot of restructuring that is going to have to occur in Indonesia as

well. But turning Japan would be a very positive move for the Asian region. We

just hope that the new Government can come to grips with some of the really

fundamental structural issues that they are going to have to face up to.

Fine, Peter Costello, Australian Treasurer. Thanks for being with us and from

joining us from our Washington bureau. Thanks again.

Thank you very much.