Rebalancing underway but significant imbalances continue
Rebalancing underway but significant imbalances continue: Bollard
Issued By the APEC Secretariat
Hong Kong, China, 22 Mar 2013 - Growing pressure on currencies and capital in the post-global financial crisis period has the potential to restrict trade and investment, according to APEC Executive Director, Dr Alan Bollard.
This is prompting APEC member economies to expand their work on addressing tariffs and behind-the-border barriers to include “third generation” issues to ensure resilient growth in the region.
Dr Bollard described the challenges that Asia Pacific economies face in the management of trade and capital flows on Thursday in Hong Kong at an Asia-Pacific investment conference.
“Major economies around the world have been suffering from very low returns on capital, lower prospects for growth and productivity, and slow recoveries with uncertainties and vulnerabilities,” Dr Bollard said.
“Rebalancing is underway but there continues to be significant imbalances which are leading central banks to put more stress on monetary policy and move from near-zero rates into unorthodox policies such as quantitative easing,” he continued. “This is contributing to depressed exchange rates in major economies and putting pressure on those in smaller, open economies with independent traded currencies.”
Among the implications in the Asia-Pacific has been the expansion of domestically sourced trade finance, infrastructure project financing and funds management. New trade, non-tariff and foreign direct investment barriers have been very limited and in general implemented to stimulate domestic growth.
The average tariff rate in the APEC region was 5.7 percent in 2011, down from around 17 percent when APEC was founded in 1989. APEC members have also reduced or eliminated some non-tariff measures such as import licenses and quotas, while foreign direct investment in the region continues to rise.
But Dr Bollard added that the orthodox monetary policy that continues to be embraced by some economies could put domestic trade and sectors under strain.
“There is concern that post-crisis financial flows are giving rise to “third generation” issues which have the potential to restrict trade and investment integration,” Dr Bollard explained.
This is being addressed in part by APEC economies’ focus on promoting inclusive growth, infrastructure financing, project finance, trade finance and financial market deepening.
“By moving forward with
APEC’s agenda, we are helping to ensure resilient growth
and improving living standards in the region through
increased trade and investment, business facilitation and
capacity building,” Dr Bollard said. “This is laying the
groundwork for more robust global