“Many economies appear to be on the right track in reducing their budget deficits but the region still faces considerable economic challenges to achieve a return to robust and sustainable growth,” said Indonesia’s Finance Minister Chatib Basri on Friday.
He delivered his report to APEC Finance Ministers on Thursday and Friday when they met on the island of Bali to discuss ways to improve the Asia-Pacific region’s resilience and strengthen the economic fundamentals for future growth in the face of challenging global macroeconomic and financial circumstances.
Ministers expressed concern about unacceptably high unemployment in some economies, highly volatile capital flows and slower growth than was expected.
“The challenges in the global economy are more than any one economy can handle by themselves,” said Minister Basri as he set the stage for the meeting. “The big challenge for us all is to remain vigilant in managing the risks, continuing reform momentum, and most importantly, maintaining the openness and dynamism in the region.”
“The world is now looking to see whether the APEC region, given its size and the role it plays in the global economy, can demonstrate its capacity to recover from economic fluctuations, and support the global economy by sustaining its own growth momentum.”
Ministers heard from the APEC Secretariat which provided a perspective on the macroeconomic environment in the region and its impact on trade finance.
“The APEC region has weathered the global financial crisis reasonably well but there have been significant impacts from adjusting to spillovers from policies put in place by the biggest economies,” offered Dr Alan Bollard, the APEC Secretariat’s Executive Director. “We’re starting to see capital flows, asset prices and exchange rate moves normalize but that process can be quite rocky for small open economies.”
“A survey by the APEC Policy Support Unit points to some changing trends in trade finance but generally it’s looked much more robust than when there was a severe contraction for the region, which contributed to the huge trade slowdown a few years ago,” Dr Bollard said in his report.
The World Bank Group reported that the global economy appeared to be moving into a new phase, in which output in advanced economies was firming, but probably not as strongly as many wished.
“Developing economy growth appears to be slowing, including in the Asia Pacific region," said Sri Mulyani Indrawati, Managing Director of the World Bank Group, when she briefed ministers this morning. "For many APEC economies, the balance of risk is once again on the upside."
“Economies in the Asia-Pacific region need to make structural reform a priority in order to extend their growth potential, which remains one or two percentage points below pre-crisis levels," Sri Mulyani noted.
Ministers are also discussing the impact of the global financial crisis and how APEC could work together to enhance infrastructure development to raise the productive capacity to make economies more robust. They are also examining the importance of reforms to maximize financial inclusion.