Message from the Co-Chairs of PECC
The world economy is at a critical juncture. At no time since the height of the economic crisis has anxiety been at a higher level. The concerted actions to respond to the financial crisis that were forged through the G20 in 2008 now seem long ago, and consensus on what to do next is elusive. Even as some issues – such as the mortgage loan crisis in the United States seemed contained, other issues – notably debt burden and possible defaults in Europe – have emerged with new vengeance.
Over the coming weeks global leaders will have the opportunity to inject a much needed sense of purpose and unity, first at the G20 summit in Cannes, next at the APEC leaders’ meeting in Honolulu and finally at the East Asia Summit in Bali.
This sequence of meetings places the Asia-Pacific region in a position to demonstrate its role as a steward of the global economy. We have argued in previous reports the core of the global economy is shifting from the Atlantic to the Pacific basin. This is a shift that has been taking place since the founding of the Pacific Economic Cooperation Council in 1980 and has been accelerated by the global financial and economic crisis that struck in 2008. As the core of the global economy, the region has a responsibility to develop strategies and take initiatives to sustain the global system as a whole.
A task force on the global economic crisis established by the Council in 2009 argued that substantial structural changes are needed to address the imbalances that had arisen in the run up to the crisis. These shifts included increasing domestic consumption in surplus economies and increasing savings in deficit economies. Both of these seem to be happening. However, this is being forgotten amidst the anxiety and turmoil in capital markets. What is missing is restored confidence in the business community. Businesses must begin investing to kick-start the growth process. Coordinated stimulus has been critical but it cannot go on forever. APEC’s focus this year on green growth and innovation may help provide an impetus to this process.
The ongoing agenda for economic integration and support for the global multilateral system are critical to the process of restoring confidence. Progress in these areas will send a strong signal to the business community that protectionism will not close off markets to their goods and services. Efforts to make the regulatory environment easier to navigate and less burdensome, especially for small and medium enterprises, need to bear fruit. As indicated by our survey findings in chapter 2, business finds “behind-the-border” problems like regulatory impediments the most burdensome. As we have done in previous reports, we focus on one particular aspect of regional economic cooperation; in this case, the Asia-Pacific energy market. Energy trade is one of the largest sectoral flows in the Asia-Pacific and energy security concerns have been a consistently high risk to growth in every one of our surveys. This year’s nuclear tragedy in Japan has further accentuated energy security and safety issues.
There are many people who made this report possible; Yuen Pau Woo and our other colleagues in the editorial committee. We would also like to express our appreciation to those who have contributed thoughts and ideas for this report, especially Tilak Doshi, Nahim Bin Zahur, Jane Drake-Brockman, and Peter Petri. Lastly, we would like to thank our member committees and the over 400 people who took the time to respond to the survey and shed some light and sense of priority to the plethora of issues that regional cooperation is expected to address.
Charles E. Morrison
Co-Chair
Jusuf Wanandi
Co-Chair