Message from
the Coordinator
The world economy has been on a roller coaster ride since the collapse of Lehman Brothers in September 2008. A deep plunge in economic output through the greater part of 2009 was followed by a sharp upturn, only to settle now into what can be described as a period of great uncertainty. Recovery in the US and Europe has been spotty, and the risk of another financial crisis remains present. Contrasting policy responses across the Atlantic further complicate the outlook, and underscore the differences among leading nations not only in prognosis but also in the type and degree of international coordination that is needed for sustained recovery.
The Asia-Pacific region faces a similar challenge. Even though Asian economies were less affected by the downturn and have largely recovered, the savings-investment imbalances which were at the root of the 2008-09 economic crisis have yet to be resolved, and an international consensus on how to address this problem remains elusive. In the meantime, businesses and workers most severely affected by the crisis are clamoring for their governments to take punitive action against other economies — leading to the specter of currency and trade wars.
Hence, if there is a single message from this year’s State of the Region report, it is that the spirit of regional economic cooperation that led to the integration of Asia-Pacific economies over the last 20 years is again sorely needed. Major surplus and deficit economies in the region are key to solving the problem that has come to be known as “global rebalancing”. In the last weeks of 2010, they will have not one, but two opportunities to face up to this challenge – first at the G20 Summit, then at the APEC Leaders’ Meeting.
While much has been made of the distinction – even competition – between the two organizations, the practical reality is that both APEC and G20 have a contribution to make in reducing international economic tensions. As a fledgling group that is still finding its niche in international economic governance, the G20 has an important declaratory role in signaling the willingness of major surplus and deficit economies to redress global imbalances. APEC, with its longer tradition of economic cooperation and more recent focus on structural reform, can lead the way with a program of regional cooperation on the very reforms that are needed to rebalance growth and to make it more sustainable.
Our cover design tries to convey the extensive and intricate interconnectedness of the region. Seen one way, the stacked triangles can be as robust and durable as a steel frame, or – seen in a different way — as fragile and ephemeral as a house of cards. The outcome will depend on sound policy development and international economic cooperation.
Yuen Pau Woo
Coordinator for State of the Region
President & CEO
Asia Pacific Foundation of Canada
The Asia-Pacific region faces a similar challenge. Even though Asian economies were less affected by the downturn and have largely recovered, the savings-investment imbalances which were at the root of the 2008-09 economic crisis have yet to be resolved, and an international consensus on how to address this problem remains elusive. In the meantime, businesses and workers most severely affected by the crisis are clamoring for their governments to take punitive action against other economies — leading to the specter of currency and trade wars.
Hence, if there is a single message from this year’s State of the Region report, it is that the spirit of regional economic cooperation that led to the integration of Asia-Pacific economies over the last 20 years is again sorely needed. Major surplus and deficit economies in the region are key to solving the problem that has come to be known as “global rebalancing”. In the last weeks of 2010, they will have not one, but two opportunities to face up to this challenge – first at the G20 Summit, then at the APEC Leaders’ Meeting.
While much has been made of the distinction – even competition – between the two organizations, the practical reality is that both APEC and G20 have a contribution to make in reducing international economic tensions. As a fledgling group that is still finding its niche in international economic governance, the G20 has an important declaratory role in signaling the willingness of major surplus and deficit economies to redress global imbalances. APEC, with its longer tradition of economic cooperation and more recent focus on structural reform, can lead the way with a program of regional cooperation on the very reforms that are needed to rebalance growth and to make it more sustainable.
Our cover design tries to convey the extensive and intricate interconnectedness of the region. Seen one way, the stacked triangles can be as robust and durable as a steel frame, or – seen in a different way — as fragile and ephemeral as a house of cards. The outcome will depend on sound policy development and international economic cooperation.
Yuen Pau Woo
Coordinator for State of the Region
President & CEO
Asia Pacific Foundation of Canada