Summary of Discussion on Macroeconomic Outlook APEC Finance Ministers’ Meeting Bali, Indonesia September 20, 2013
Naoyuki Shinohara, Deputy MD, IMF
US, EU, and Japanese economies signal better growth prospects. Asian economies remain solid. Downside risks include o Slower growth in China o Slow pace of structural reforms (e.g. fiscal reform) in US and Japan o QE tapering leading to volatilities in financial markets Therefore, countries need to continually monitor and manage their exposures, including their deficit and inflation which could be affected by the global financial volatility.
Dr. Sri Mulyani Indrawati, COO & MD, World Bank
Growth in slowing in Asia. Advanced economies growth in gaining momentum despite fiscal consolidation. QE tapering resulting in capital flow volatility and higher interest rate. With exception of India, effect of QE tapering on Asian economies is contained. With better prospect in advanced economies growth, global trade should pickup. For countries that already recovered, macroeconomic policy should be re-adjusted. For countries that depend on external financing, should better manage foreign exposures against the backdrop of global financial turbulence. Countries should also continue to do structure reform and infrastructure improvement to improve long run productivities.
Takehiko Nakao, President, ADB
Asian economies are generally robust with stable growth and high international reserves. ASEAN+3 has in place the Chiangmai Initiatives Multilaterisation as a regional safety net from volatility in capital flow. ASEAN has in place ASEAN Infrastructure Fund and Master Plan on ASEAN Connectivity as a mechanism to improve regional infrastructure. ASEAN also moving towards ASEAN Economic Community which should help strengthen our regional resilience. In addition to “hardware” reform such as infrastructure investment, countries should aim to do “software” reform.
Lou Jiwei, Minister of Finance, China
China’s GDP is back to normal. The high growth we observed during the past years were due to stimulus government policies and did not caused inflationary pressure given the slow stage of global economy. The however has changed as in recent years, China has been facing with higher inflation and hence such stimulus government policies may not be appropriate. At 7-7.5%, China’s growth is suitable and close to potential. During the past, China has over-invested in infrastructure. But there are needs still to build more infrastructures, in both developing and developed countries. U.S. and EU each need to invest around 2 trillion USD in infrastructure. Asia needs to invest around 3 trillion USD in infrastructure. And hence, the concept of Asian Infrastructure Bank to complement the work of ADB and WB. We have a lot of things to do, but infrastructure is the most important thing right now.
-2Yoshita Ito, Permanent Secretary of Finance, Japan
Abenomics consists of 3 arrows: 1) monetary policy, 2) fiscal policy, and 3) growth policy. So far, Abenomics has been quite successful with H1/2013 growth at 4.1% (annualized) and unemployment at 3.8%. The 3rd arrow, growth policies, can be divided to A) Promotion Policies such as institutional reform, tax incentives for investment, and support greater share of women in workforce, B) International Outreach such as encouraging Japanese companies to operate abroad and more FDI into Japan, and C) Market Creation such as healthcare industry. With regard to Fiscal Consolidation, Japan aims to balance her primary budget deficit by 2020. With Abenomics, tax would increase. With more efficient healthcare delivery, public expense would be contained.
Marisa Lago, Assistant Secretary of the Treasury
U.S. has been growing during the past 4 years, averaging around 2.5 percent per year. Recently, growth has been driven by the private sector. Investment in education, clean energy, and high tech industries will be future drivers of growth. Sequestration will be done though a balanced package. Congress will need to raise the debt ceiling.
Oh Seok Hyun, Minister of Finance, Korea
Three important things APEC should focus in: o Need to strengthen collective effort to address financial shock. o Need stronger financial safety net at both national and regional levels. o Need rigorous sectoral reforms, e.g. infrastructure and labor market, in order to boost productivity.
Tharman Shanmugaratnam, Deputy Prime Minister and Minister of Finance, Singapore
Composition of fiscal policy is also important, especially with regard to the tradeoff between growth and equality. Inter-generational inequality has received inadequate attention. Fiscal reform that involved unfunded social policies often overlooked this point leaving the future generation the burden of the current generation.
Areepong Bhoocha-oom, Permanent Secretary of Finance, Thailand
Thailand growth so far has been robust (not in real recession). Household debt has increased due to one-off event and policy. Thailand has sufficient fiscal room to safeguard the economy. Rice program has been revised in a manageable level. Thailand has conducted tax reform, CIT and PIT, making us more competitive. Tourism is record high, helping growth and distribute wealth in all areas of Thailand. Thailand is aiming to upgrade our infrastructure and logistics system (amounted to 2 trillion THB).
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