Structural Reform Needed for Regional Growth
“Addressing structural weaknesses highlighted by the crisis is critical if APEC Members are to sustain long-term economic growth,” APEC Economic Committee Chair Dr Mitsuru Taniuchi said today.
Two APEC Economic Committee Reports released today showed recovery in the region is gathering momentum. Growth in APEC’s developing members is expected to remain strong for the next 10 years and beyond, albeit slower over the last decade. However, structural reforms would raise annual growth in APEC developing economies by about one per cent a year.
“The reports highlight the need for substantial structural reform to achieve sustainable high growth, especially in developing economies,” Dr Taniuchi said. “But they also stress the rich growth potential of the region, provided underlying structural problems are addressed.
“APEC needs to refocus APEC cooperation under the goal of ‘consolidating the basis for growth in the 21st century’ for the next few years,” Dr Taniuchi said. “APEC is well placed to carry out this work through its Economic and Technical Cooperation (ECOTECH) programme focusing on activities directly bearing on strengthening and opening markets and developing the social framework.”
The first of the reports, “The APEC Economic Outlook”, shows growth slowed significantly in the region in 1998, with some areas recording negative growth, including North and South-East Asia.
Recovery is now taking hold in many APEC economies. The report concludes that the upward trend observed to date in APEC economies will continue in the second half of 1999 through 2000.
The Committee also released the first Progress Report of a two-year research project, “APEC Economies Beyond the Asian Crisis.” It shows that annual growth in APEC developing economies from 2000-2010 would be about one per cent higher each year if structural reforms were carried out.
The Progress Report highlights major weaknesses in four areas:
financial sector (such as ineffective prudential
The corporate sector (such as weak corporate governance)
Economic policy making (such as sequencing of liberalisation)
Social safety provision (such as securing minimum living standards in times of crisis)
“Addressing structural weaknesses will make a difference to realise renewed growth over the longer term,” the report says. “The primary focus of APEC’s response to the crisis should be on longer term issues of attaining robust growth.
“International financial institutions are best placed to fight a raging fire by mobilising financial resources for crisis resolution. APEC’s comparative advantage is to help its members redress structural weaknesses highlighted by the crisis so as to maximise the region’s long-run growth potential.”