Message from the Co-Chairs of PECC
While attention in 2011 was very much focused on the prognosis for the United States and Europe, this year, concerns have spread to major emerging markets. In previous reports we had talked about multi-speed recoveries from the crisis and emerging markets driving growth. While emerging markets are continuing to contribute most of the region’s growth, the share is set to decline. This is due not only because of the tentative recoveries taking place in developed economies but also due to moderations in growth in key emerging economies.
These changes to economic growth patterns in the region are well reflected in this year’s survey of opinion-leaders. The top three risks to growth cited by our panellists are: slowdowns in China, the United States and the European Union. The relative optimism over growth in China and India seen in previous years has dissipated with a majority of respondents expecting slower growth over the 12 months. One economy that made it into the list of 10 top growths is Myanmar – until very recently excluded from much international commerce. We include a special feature on reforms in Myanmar in this report.
As far as risks to growth are concerned, beyond the headlines of slower growth and banking/financial crises, two issues stand out: rising income inequality and growing protectionism. In 2009, APEC leaders made a direct connection between inclusive growth and future support for trade liberalization. That both are listed as top 10 risks to growth show that there is a long way to go to deliver concrete results. Even though APEC leaders have committed to resist implementing protectionist measures at their last three meetings, there continues to be an increase in their adoption. As we said in our statement to APEC trade ministers, some 20 percent of all protectionist measures adopted since the crisis have been by APEC members. While this is low compared to APEC’s share of global trade, it is not a standstill. Some may dispute whether some measures are truly protectionist and in violation of global trade rules; nonetheless, there is a need for continued vigilance and pressure to prevent backsliding into the tit-for-tat policies that were so ruinous to the global economy in previous times of economic hardship.
As APEC leaders prepare to gather in Russia it is worth pausing to consider the footprint of the region. This year, APEC meetings have been held in St. Petersburg, closer to the Atlantic than the Pacific by some margin. There are now two leaders’ level processes that deal with broadly the same footprint: the APEC process, and the East Asia Summit (EAS) process. While there are differences in membership, they share 14 members in common. As far as Asia-Pacific or transpacific cooperation is concerned, it has always been more about an idea than a specific set of territories. That idea found its ‘official’ articulation in 1994 with the APEC Leaders’ Declaration of Common Resolve which included the Bogor Goals.
Myanmar has begun to take steps to open up its economy, and indeed, with all ASEAN members set on the achievement of an ASEAN Economic Community by 2015, there are a few more economies in the Asian side of the Pacific that potentially meet APEC’s criteria of pursuing externally oriented, market-driven economic policies. For the EAS, signing onto the Treaty of Amity and Cooperation sets a more formal bar to membership. If one was to read these documents together, they contain an important set of norms of how affairs in the region should be conducted and a general direction for the region to move together.
While the Asia-Pacific has grown at a remarkable pace over the past thirty-two years, there remain serious risks to peace and prosperity of the region. Growing protectionism and inequality are but two of the risks we face; there are many other issues the region needs to confront if it is to achieve this vision. One aspect of this is to help those economies who are currently not part of the broader groupings manage their integration into the regional economy. We hope that PECC, by bringing together those committed to the region’s common vision, will continue to contribute to the development of the Asia-Pacific.
There are many people we wish to thank who have made this report possible, firstly the contributors, Bobby Mariano, Petri Petri, Vo Tri Thanh, Yuen Pau Woo, Bo Chen, ThaungTun, Liu Minquan, Hossain Shanawez, the members of the report’s editorial committee, the over 500 people who took the time to respond to the survey, the coordinator of the report, Eduardo Pedrosa and all of his staff at the PECC International Secretariat.
Jusuf Wanandi
Co-Chair
Donald Campbell
Co-Chair