Asia-Pacific’s developing economies need to implement more reforms and work more closely together to mitigate the impact of the global economic slowdown on the region, according to finance ministers of the Asia-Pacific Economic Cooperation (APEC).
“Developing economy growth appears to be slowing, including in the Asia-Pacific region,” said Sri Mulyani Indrawati, managing director of the World Bank Group, during last week’s APEC Finance Ministers’ Meeting in Bali, Indonesia. “For many APEC economies, the balance of risk is once again on the upside.”
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.
“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,” said 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.”
Indonesia’s Finance Minister Chatib Basri noted that while many economies appear to be on the right track in reducing their budget deficits, the region still faces considerable economic challenges to achieve a return to robust and sustainable growth.
The finance ministers likewise expressed concern about unacceptably high unemployment in some economies, highly volatile capital flows, and slower growth than was expected.
They explored ways to improve the Asia-Pacific region’s resilience and economic fundamentals amid challenging global macroeconomic and financial circumstances.
“The challenges in the global economy are more than any one economy can handle by themselves,” said Minister Basri. “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.”
Sri Mulyani pushed for prioritizing structural reform by Asia-Pacific economies to extend their growth potential, “which remains one or two percentage points below pre-crisis levels.”
Said Minister Basri: “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.”