Euro crisis shows need for Asia reform: Australia

(SYDNEY) - Asian economies needed to "redouble their efforts" to boost domestic demand and restructure their economies following the European debt crisis, Australian Treasurer Wayne Swan said Sunday.

Swan said there had been a "pretty clear sense of frustration" about Europe's slow progress on a recovery plan at APEC finance ministers' talks in Honolulu, but urged Asia-Pacific nations to take lessons from the turmoil.

"The weaker and more uncertain global economic outlook means Asian economies need to redouble their efforts toward economic rebalancing and strengthening sources of growth," Swan said in his weekly economic memo.

"Asia can no longer rely on demand far beyond its borders to keep fuelling the region's economies," he added.

"Governments need to do more to lift domestic demand and put in place structural reforms, including shifting to more market-based exchange rates."

Swan said Asia's long-term prospects remained positive but the verdict from APEC was that "every economy in our region is feeling the impact of events in Europe".

"It's hitting the region's financial markets, unsettling businesses and consumers, and dampening trade," he said.

"Obviously, this flows through to (Australian) government revenues, and will add to the Aus$130 ($134) billion in revenue write-downs we've seen since the global financial crisis first struck."

Swan said APEC had moved to encourage greater investment in infrastructure in the region -- "critical to building future capacity" -- and creating cross-border markets for managed funds.

But he warned that individual countries also needed to act.

"The sovereign debt crisis that's gripping Europe has shown there's a very high price to be paid for countries that put reform in the too-hard basket," he said.

"Europe's sovereign debt crisis highlights the speed with which events can unfold when fundamental reforms are ignored. Markets can move quickly, leaving policymakers struggling to catch up," added Swan.

"The lesson here is that governments can waste no time in implementing the necessary policies to keep their economies competitive."