This report is a summary of studies conducted by the PEO (Pacific Economic Outlook) Structure project group coordinated by Dr. Akira Kohsaka, Professor of International Studies at Kwansei Gakuin University, Japan. The PEO Structure group held two international meetings in March and September 2010 in Osaka, Japan. These meetings were hosted by the Japan Committee for PEO which is housed and staffed by the Kansai Institute for Social and Economic Research (KISER). The publication consists of an overview essay followed by executive summaries of individual economies/ regions contributed by specialists from PECC member economies.

OVERVIEW
- Macro-financial Linkages and Transmission of Financial Crises
- The Changing Patterns of International Capital Flows in East Asia
- Financial Developments in Emerging Markets
- Development of Domestic Financial Systems in East Asia
- Policy Implications

EXECUTIVE SUMMARIES
- Australia
- China
- Hong Kong, China
- Indonesia
- Japan
- The Philippines
- Chinese Taipei
- Thailand

For more information, please contact:

E. This e-mail address is being protected from spambots. You need JavaScript enabled to view it
T. +81-6-6441 5750
W. www.kiser.or.jp/peo/ja/index.php  

The State of the Region 2011-2012 report was released at the 20th General Meeting of PECC in Washington D.C. on 29 September 2011.

Click to download:
State of the Region 2011-2012 (pdf, 2.97MB)
Supplement: Prospects for Transpacific Energy Trade (pdf, 950KB)

Related press releases

Growth in the Asia-Pacific to Slow
Growth in the Asia-Pacific region is expected to slow to below 3.6 percent this year, down from 4.8 percent in 2010. The multispeedrecovery from the crisis continues into 2011 with emerging economies performing considerably better than developed ones.Although the recovery continues, pessimism is on the rise and it is widely expected that the growth outlook for major developed economies will be further revised downwards in the last quarter of 2011. Emerging economies, however, are continuing to perform relatively well, contributing two thirds of the region’s 3.6 percent growth this year.

Inflation in Emerging Markets
Inflation in the region for 2011 is expected to be close to 3.0 percent and to moderate to 2.1 percent in 2012. However, as with the GDP growth figures, the aggregate number masks a multispeed region with inflation in developed economies running at 1.8 percent and emerging economies at 5.3 percent – the second highest rise in prices over the past decade. As with the forecastsfor GDP growth, these are based on forecasts made by the IMF in April, and it is most likely that these forecasts will be revised upwards by the time of the October update later this year.

Growing Sense of Pessimism
Our annual survey of opinion-leaders reflects the growing sense of pessimism about the economic outlook. Over 65 percent of opinion-leaders expect global growth to be weaker over the next 12 months compared to the previous 12 months.The last time pessimism was this high was in 2008 just as thecrisis was breaking. Macroeconomic risk factors such as a slowdown in the US economy, a sovereign debt crisis in the Euro-zone, and a slowdown in the Chinese economy dominate the risks togrowth in the region. Opinion-leaders see investment in new technologies and innovation systems as the top policy objective for sustaining growth, followed by addressing the US fiscal and current account deficits and rebalancing growth in East Asia.When asked what the APEC leaders should focus on at their discussions in Honolulu during their annual summit, FTAAP ranked number 1, followed by green growth, WTO DDA,corruption, and the APEC growth strategy. However, viewson pathways to a Free Trade Area of the Asia-Pacific (FTAAP) remain somewhat equivocal with different sub-regions preferring either the Trans-Pacific Partnership or the ASEAN plus agreements. The critical point is that there is no reason toforce a choice, ultimately the ASEAN plus and TPP tracks can be mutually reinforcing. Clearly, opinion-leaders support this view with over 70 percent of respondents agreeing that regional economic integration should be pursued along multiple tracks. There was also a high degree of support for what could be deemed as a sectoral initiative, albeit a global one, with over 70 percent of respondents agreeing that APEC members should take a lead in promoting a plurilateral agreement on services.

Sub-Regional Trade Dominates
The pattern of trade in major product categories is dominatedby exchange within sub-regions rather than broadly across the Asia-Pacific. This is especially true in the case of oil and gas, for which there is virtually no movement across the Pacific ocean.The recent discovery of massive “unconventional gas” reserves in North America has raised the prospect of the emergence of atranspacific energy market.

Crisis Impacts Regional Economic Integration
The PECC composite index of regional economic integration shows that overall economic integration slowed in 2008 due to decreased intra-regional flows and increasing divergence amongthe economies of the Asia-Pacific region. As data for the index comes in with a significant lag, the index is measuring the state of integration as of the end of 2008. Although all three major flows that the index covers showed decreases in 2008, it was the drop in intra-regional flows of foreign direct investment that had the most impact on the index. This is not surprising given that FDI flows are a pro-cyclical indicator with the dip foreshadowing the negative shock from the economic crisis.The convergence sub-index continued to fall in 2008. This subindex measures the degree to which the economies of the region are becoming more alike in terms of key economic variables such as GDP per capita, expenditure on education, and share of non-agricultural GDP. A falling index means economies in the regionare not converging in terms of these indicators.

Title: Conference on Growing APEC Economies: New Challenges & Approaches
Edited by: Tan Khee Giap, Eduardo Pedrosa, and Grace Aw


Confronted by many challenges emerging from the current climate of uncertainties, various structural changes are taking place amog the APEC economies, large and small, developing and developed, surplus and deficit. This year's PECC conference in Singapore gathered thought-leaders and decision-makers from across the region to discuss various critical issues including the creation of employment, technology, upgrading, relative economic growth and sustainability.

The two-day conference was co-organized by the Singapore National Committee for Pacific Economic Cooperation (SINCPEC) and the United States Asia Pacific Council (USAPC). This conference report is a compilation of presentations and discussions that took place during 29-30 June 2011 in Singapore.



Individual chapters of the publication are available for download in pdf format:

1. Welcome remarks and keynote address
2. Growing economies in APEC
3. Growing trading in services in APEC economies
4. APEC's growth: State of the Region report presentation
5. Managing capital flows
6. Strategic importance of regional economic integration and cooperation (APEC, EAS, and G20)

The program agenda and papers for download are also available here.

PECC at 30: New Vision for APEC and toward Further Regional Economic Cooperation

The publication contains the complete set of speeches and summary of presentations made during the 19th General Meeting of PECC held in Tokyo, Japan during 21-22 October 2010. 

Download the entire publication: PECC GM XIX (2.13MB)

Two major economic crises have hit the Asia-Pacific region in the past 13 years. Our society has to be resilient against these economic shocks. To facilitate discussions on the development of social safety nets in this region, the Japan National Committee for Pacific Economic Cooperation (JANCPEC) launched the Social Resilience Research Project (SR Project) in 2009 as a PECC international project.

The SR Project consists of four teams – pensions, medical insurance, unemploymentinsurance, and macro analysis of savings/consumption – and each team comprises two to seven research members. This is the first time that PECC has addressed these particular social issues; heretofore it has been exclusively concerned with measures to liberalize and promote trade and investment.

A financial crisis of a “once-in-a-century” scale has struck at the underpinnings of social safety in the Asia-Pacific region. The earlier 1997-98 crisis saw vigorous debates over social safety nets, but these debates quickly faded after 2003 because, with Asia’s export markets in Europe doing well at the time, the crisis was overcome simply by pursuing the liberalization of investment and trade. The situation this time is different in the sense that market conditions in Europe and the US are worse than in Asia, inspiring little hope for economic growth by relying on exports to these economies. On the other hand, we are in a similar situation to the previousfinancial crisis in that the debates over social safety nets are about to fade again as the economy in this region starts to recover, led by the robust development of emerging markets in Asia. Many economies in this region are gaining economic impetus by increasing exports to developing Asian economies.

Economic crises have hit our economies almost every ten years during the past two decades. Being aware that we must consider not only economic rescue policies in the short term but also the resilience of infrastructure against frequent economic crises in the long term, we launched the Social Resilience Research Project (SR Project) last year as a PECC International Project. 

The SR Project is designed to shed light on the importance of social safety nets and to closely examine the mechanism of their roles in the domestic economy. This topic has never been discussed in depth among APEC economies. Overly focused on the liberalization of investment and trade, APEC has let slip opportunities to discuss the sense of security of those persons who underpin liberalization and brisk domestic demand as well as social safety nets for them in connection with a major paradigm shift toward the construction of a resilient model for sustained economic growth. In this regard, the SR Project is a very good opportunity to focus more on the social and living conditions of people and to share good or bad practices for social safety nets in the Asia-Pacific region. Comparative research on the actual status of Asian social safety nets would definitely be useful if we are to make our society more resilient against economic crises that may occur again in the future.

The economies in this region are recovering steadily, and now is the time to pay more attention to organizing domestic social safety net systems. Instead of missing this opportunity again as we did in the late 1990s, we should highlight the significance of constructing a resilient society and take action as soon as possible.

Download report:  Towards a More Resilient Society: Lessons from Economic Crises (4.85 MB)

Even as the economic recovery from the downturn of 2009 gathers momentum across much of Asia-Pacific, there is great uncertainty in the region about the durability of the recovery. The risk of another economic downturn stems less from a renewed bout of financial sector problems than from a failure of international economic cooperation. The forthcoming G20 and APEC Summits provide an opportunity for leaders of major economies to address the current unsustainable pattern of global flows and to step back from the brink of currency and trade wars.

Chapter 1 describes the current economic environment and the pattern of recovery in the Asia-Pacific region over the last 12 months. It points out that the underlying problem of global savings-investment imbalances have not been resolved, and that these imbalances continue to weigh heavily on the world economy. To achieve a more sustainable growth path, the report stresses that the extraordinary fiscal  interventions during the economic crisis of 2008 have to be unwound, and surplus countries have to rely less on exports for growth. This will require structural reforms in both deficit and surplus countries, and a high degree of international cooperation.

Financial regulatory reform in the advanced economies at the epicenter of the crisis is an ongoing priority. To achieve sustainable growth, financial institutions must also be willing to resume lending. A troublesome aspect of the recovery is the uncertainty around financial sector reforms, both because of pushback from powerful vested interests and the need to get the reforms right. In the troubled advanced economies the extraordinary support for the financial sector during the crisis has to be unwound and banks’ bad assets removed from their balance sheets. Risks of futureinstability also need to be reduced and ways found to tackle future financial crises without taxpayer support.

APEC has an opportunity to make a unique contribution to global rebalancing by showing regional leadership on structural reform. APEC leaders could commit to deliverables appropriate to surplus and deficit economies in such areas as regulatory reform of services sectors, the financing and provision of infrastructure, development of a low carbon economy, and capital market reforms to allocate capital resources more efficiently. Collective action in a number of these areas have the potential to be new growth engines for the region.

Highlights from our annual survey of regional opinion leaders are described in chapter 2. Across the Asia-Pacific region, opinion leaders are less optimistic about the prospects for growth over the next year than they were in last year’s State of the Region survey. Respondents were mixed in their expectations for growth over the next 12 months. Thirty-six percent of respondents expected global growth to be stronger over the next 12 months compared to 26 percent who thought it would be weaker. The biggest risk to growth was identified as weakness in the US economy. 

We asked opinion leaders what they thought should be the top five priorities for APEC leaders when they meet in Yokohama. The top issues were as follows:

i) a post-crisis strategy for the region; ii) a free trade area of the Asia-Pacific; iii) the WTO Doha Development Round; iv) financial sector regulatory reform; and v) the region’s  response to climate change.

Our survey highlights the importance of strengthened financial regulations across the world to achieve sustained growth as well as the rebalancing growth towards greater emphasis on domestic demand in East Asia.This rebalancing will require the kind structural reforms described in chapter 1 and elaborated in the PECC task force report on “Inclusive, Balanced, and Sustained Growth” released in 2009.

On trade issues, our survey underscores the need for more focus on behind the border issues such as intellectual property rights, standards and regulatory issues. These items were rated as the top 3 challenges to doing business in the region.

In chapter 3, we update our index of regional economic integration. In summary, the index shows a continued deepening of Asia-Pacific economic integration. However, the index also shows that while overall economic integration has increased, there are growing divergences in key development indicators such as real GDP per capita, education expenditure, and life expectancy. The growing divergence in these other areas, both among economies and within economies, threatens support for further liberalization of trade and investment in the region as well as the appetite forprecisely the kind of international cooperation that is needed today to avert global economic conflict.

 State of the Region 2010 (1013.23 kB)

Indonesian Minister of Trade, Her Excellency Dr. Mari Pangestu, is the co-editor of a new book Light the Lamp: Papers on World Trade and Investment in Memory of Bijit Bora.  The book was launched in Jakarta on 21 July 2010.  Co-editors are Christopher Findlay and David Parsons.

Bijit Bora, a staff of World Trade Organization (WTO), was a long-time contributor to the work of PECC, especially to the Trade Forum and to PECC’s work on investment.  He died suddenly in 2006 aged 45 and this collection of papers covers the main topics of his research interests.  The papers include applied analysis of questions of policy in international trade in fields related to Bora's interests, including foreign direct investment, trade in services, competition policy, and trade and development. It contains previously unpublished papers by Bora on the impact of the WTO. The volume also includes a paper by Dr. Pangestu on the future of world trade policy, which is based on her speech to the PECC GM in Washington in May 2009.  Other contributors include Shujiro Urata, Kym Anderson, Richard Pomfret and David Round.

Contents:

• The Future of World Trade Policy
• Evaluating the Impact of the WTO Information Technology Agreement
• Economic Analysis and WTO Arbitration Cases
• The Impact of Manufacturing Protection on Agricultural Incentives in Australia
• India and the Global Demand for Commodities: Is there an Elephant in the Room?
• Foreign Direct Investment in China: Trends, Characteristics and Impacts
• The Changing Patterns of Trade and Investment in East Asia
• The Integration of the Electronics Sector in ASEAN
• Regional Value Chains and Asian Regionalism
• Recent Developments in the Literature on Foreign Direct Investment and Labour Markets
• Competition Policy in International Airline Markets: An Agenda and a Proposed Solution

Readership: International trade analysts, trade policy advisers, staff of international organizations, university lecturers in schools of business and economics, students in courses on international trade and development.

The book can be ordered here

https://www.worldscibooks.com/business/7678.html

 The State of the Region report is an annual statement of PECC’s views on the major developments affecting Asia Pacific regional cooperation.

The report contains a broad overview of economic state of relations and other issues as they relate to economic state of the region. The project's objective is to provide an easily accessible update on the progress being made in community building in the Asia Pacific.

 State of the Region Report 2009 (220KB)

The food system is one of the economic sectors most sensitive to the potential consequences of price volatility. The expectation is that price volatility will continue for at least the near term. Public and private sector decision makers around the region need the best possible information to address this challenge.

This year’s report analyzes the underlying factors driving volatility; the potential nearterm implications for production agriculture, food security, and the broader food system; and the nature of measures and approaches that governments and the private sector might employ to reduce potential adverse economic impacts.

This taskforce report (January 2010) examines the developments in the international tertiary education sector, and in particular, the opportunities and challenges they present for regional economic integration and community building in the Asia Pacific.

 

 

 

The project is a collaborative effort between PECC and the Association of Pacific Rim Universities (APRU). The World Scientific publication is available for purchase here.

 

To download the executive summary, click here:   The Globalisation of Education: The Next Wave (315.72 KB)

 

Edited by Peter A. Petri

Published by PECC and ISEAS (May 2010) 

To order please click here. Electronic copies are also available for download by chapter.

Over the past decade, small and medium enterprises (SMEs) have attracted considerable attention for their wide-ranging contributions to the economy. Amidst new business environment and challenges created through globalization and cross-the-border transactions, SME policies and business context in different Asia Pacific economies were studied and compared throughout the PECC international project. Case studies were taken from:

Australia, Canada, Chile, Colombia, Japan, Korea, New Zealand, Singapore, Chinese Taipei, and Vietnam.

This international project was led by the Chinese Taipei committee of PECC.

Download the entire report (PDF, 2.6MB) 

To download by individual chapters:

1. SME Policy Development in a Global Economy - Australian Perspective

2. SME Development and Policy in Canada

3. Disappointment and Challenge - Chile

4. The SMEs in Colombia

5. The Policy Environment for Promoting SMEs in Japan

6. SME Innovation Policies in Korea

7. The New Zealand Policy Environment for the Development of SMEs

8. SME Development in Singapore

9. The Changing Face of Chinese Taipei's SME Sector

10. Policies for Developing Small and Medium Enterprises in Vietnam

* Overview of SME Policies in Selective Economies