By Tetsushi Kajimoto

TOKYO, Reuters -East Asian leaders in economics warned of the risks to their outlook on Thursday and promised to continue to support market stability and sound fiscal policies.

In a joint statement, the finance ministers and governors of central banks said that economic risks include unexpectedly rapid rises in interest rates in “some advanced nations”, runaway inflation, and disruption to supply chains as a result of war in Ukraine.

This statement came after annual meetings that were held online by officials from China (Japan), South Korea and 10 other members of the Association of South East Asian Nations.

Japanese, Chinese, and South Korean officials reiterated their determination to support financial markets stability and long-term fiscal sustainability.

“We must remain on guard against heightening risks to which the regional economic recovery is being exposed … on top of the ongoing Russia-Ukraine conflict and earlier-than-expected monetary policy normalisation in some advanced nations,” it said.

These factors may pose a downside risk to regional economic outlook and cause volatility in financial markets or capital flows.

This statement was made amid fears that U.S. interest rate increases and associated reductions in central bank assets may have pushed up the dollar. These factors have led to concerns about capital flight in some emerging markets as well as a rise in dollar-denominated loans in the developing world.

They avoided any mentions of currency market changes, including rises in dollar and falls in yen or sanctions against Russia for its invasion of Ukraine. Moscow describes this as a “special operations.”

They instead emphasized progress in regional initiatives including a mechanism to help countries in financial distress like the Chiang Mai Initiative Multilateralisation Currency Swaps.

Within the Group of 20 major economies (G20), a deep division has developed. This includes Western countries that accuse Moscow of war crimes against Ukraine. China, India (China), South Africa and Indonesia have all resisted Western-led sanctions on Russia for the conflict.

ASEAN, headed by Cambodia in 2015, includes Indonesia which is currently the G20’s chair.

In discussing the invasion in Ukraine, Shunichi Suzuki, the Japanese Finance Minister used more harsh words than that of the joint statement.

Suzuki said that Russia’s inexplicable invasion of Ukraine had “shaken the foundations of international order” and was a violation of international law. It is having serious consequences on the world economy, with rising energy prices, disruptions to supply chains, financial market instability, and increased numbers of refugees.