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Challenges force Apec to adjust
Publication Date : 07-10-2013
Fresh concerns over the state of the US economy, the prolonged economic recovery in Europe, slowing growth in China and India as well as Japan’s new economic policies will force the 21 Pacific-Rim economies gathered at the Apec Summit in Bali to adjust to such adverse conditions.
Government and corporate leaders gathered on Sunday in Nusa Dua, Bali, for the prestigious annual Apec CEO Summit to deliver a strategic assessment on the state of the global economy.
In their joint statement on Saturday, Apec’s ministers warned global growth was too weak, risks remained on the downside, and the economic outlook suggested growth was likely to be slower and less balanced than desired.
Against such a backdrop, Singapore Prime Minister Lee Hsien Loong suggested continued prosperity for countries depended on two factors: countries did the right things with their national policies and they did the right things in terms of cooperating with each another.
He hoped businesses would also promote the process, encouraging governments to be open and not to opt for protectionist measures.
“I know every business lobbies their government in order to look after its interests. But it’s important to maintain this public support for openness and integration,” said.
“If we close ourselves or even hinder the process of trading and doing business with one another, I think we’ll just make things worse for all”.
The Apec economies remain a crucial source of global growth. According to the International Monetary Fund (IMF), as a group, Apec is expected to grow by 6.3 per cent in 2013 and by 6.6 per cent in 2014 which is more than twice the world average.
At present, Apec economies account for 54 per cent of global gross domestic product (GDP) and 44 per cent of global trade.
Within the region, trade has grown nearly seven-fold since 1989, reaching over US$11 trillion in 2011. In the past 25 years, average tariffs in Apec have declined by close to 70 per cent. The cost of conducting business across borders decreased during two successive rounds of 5 per cent tariff reductions, resulting in nearly $59 billion in savings for businesses.
“During this hardship period, Apec member economies will only make the global economic turmoil worse if they shut their doors to each other,” said Chile President Sebastián Piñera.
President Susilo Bambang Yudhoyono also emphasised the need to prevent protectionist policies amid criticism that Indonesia had increasingly applied several non-tariff barriers to help it climb the value chain and address a widening trade deficit.
“We all need to play our part to prevent protectionist policies and continue on our path of trade liberalisation in ways that lift up the well-being of all our citizens,” said Yudhoyono in his opening remarks at the CEO summit.
“We must also ensure our trade relations are not only strong but balanced.”
The weak US economic recovery has been exacerbated by a political impasse, as the Federal government budget shutdown has made it impossible not just for the administration to carry out its normal diplomatic activities, but also to address the longer-term structural problems with the fiscal deficit infrastructure and education.
In Europe, while there has been stabilisation, deep structural problems remain, with looming mishaps.
In China, growth has slowed to 7.5 per cent with the world still watching to see how the new Chinese leadership will react.
China’s central committee, which makes major policy decisions, will meet in November, and everyone is watching to see which direction the new leadership will take.
“What China needs now is equality in growth. Aggressive government spending is needed to help phase off declines in other sectors so that we remain resilient,” said
Frank Gaoning Ning, chairman of the COFCO Corporation, China’s largest food processing manufacturer and trader.
Under the administration of Prime Minister Shinzo Abe, Japan is embarking on fundamental changes in order to set itself right after a very long period of stagnation.
Prime Minister Lee suggested countries improve infrastructure, skills development and innovation, bettering the overall business environment to encourage the private sector to grow and develop.
He also expected businesses to provide concrete feedback for governments on what they needed to do more or what they needed to perform better.
“The feedback has resulted in useful initiatives through the Apec process. We have the Apec business travel card, Asia region funds passport and we hope we get more ideas from businesspeople. Every time we meet at Apec, we meet the business community and from here, new initiatives can come.”