American economist Joseph Stiglitz warned in Singapore on Thursday that economies in Southeast Asia might experience significant slowdown if interest rates in the region continue to rise.

"I think there's a real risk that raising these interest rates will cause a slowdown. One understands the motivation for it.... the increase in oil price will feed through to inflation and central banks have a real focus on inflation. But the problem is, in some sense, it will be hitting the economy doubly," Channel NewsAsia quoted him as saying.

The Nobel economics laureate explained that the high oil prices will strengthen the dampening effects of raising interest rates.

Noting that countries in the region have become less dependent on the United States and more dependent on each other, Stiglitz said that coordination of macro-economic policy is needed to avoid simultaneous slowdown.

While warning central banks in Southeast Asian countries against such a risk, he admitted that the increases in interest rates have been moderate so far.

On the issue of a common currency for Asia, the former World Bank chief economist refused to give support for the idea, but encouraged more monetary cooperation in the region like forming an Asian Monetary Fund.

"The issue of a common currency requires a lot of similarities between the countries because when you have a common currency, you give up an instrument, you give up an independent monetary policy, " he said, adding that Asia is not ready for it.

Stiglitz is on a business trip in Singapore.

Source: Xinhua