Transcript Beyond the golden era - East

Fast-forward:
the Asia-Pacific after the crisis
Peter A. Petri
Brandeis University and East-West Center
Asia Pacific Council
May 6, 2010
Slide 1
Most likely a “V”
Real GDP growth rates
14
12
10
8
6
4
2
0
-2
-4
2005
2006
2007 2008
USA
ASEAN-5
IMF WEO April 2010
“WEO Apr10 groups”
2009 2010
China
World
2011
2012
2013 2014
2015
Advanced Asia
Slide 2
Growth before and after crisis
Real GDP growth rates, 2000-07 and projected 2009-15
12
10
8
6
4
2
After
Before
IMF WEO April 2010
“WEO Apr10 groups”
Slide 3
The rebalancing challenge
• Rebalancing demand
– Make demand sustainable (Asian consumption, investment)
– Link to engines of growth (Asian trade and demand)
• Rebalancing supply
– Expand net exports (deficit economies)
– Energize non-tradable sectors (surplus economies)
• Magnitudes
– Imbalances declined in crisis; now rising
– Manageable if addressed now
Slide 4
Structural policies
US
• Budget discipline
• Financial regulation
• Export renewal
China
•
•
•
•
Japan
• Deregulated services
• Energy and conservation technology
• Services for ageing populations
Increase household income, security
Capital market development
Infrastructure, renewable energy
Currency flexibility
Slide 5
When will China pass the US?
Current dollar GDP projection based on prior 5-year growth rate
2070
Projected Catchup
2060
2050
2040
2030
2020
2010
2000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year of Projection
Purchasing power
Calculations based on IMF WEO April 2010
“catchup graph”
Market prices
Slide 6
Rebalancing US exports
US exports 2009
Other
Developing
Europe
US export growth, 2009-14
Other
Developing
Europe
Other
Advanced
Western
Hemisphere
Western
Hemisphere
Developing
Asia (20%)
Other
Advanced
Developing
Asia (41%)
Calculations based on US Department of Commerce trade (5/2/2010) and IMF WEO GDP data (4/2010)
“WEO apr10
groups”
Slide 7
US strategic imperative
• Priorities
– Engage emerging economies (Asia)
– Facilitate domestic adjustment (exports)
– Manage multi-layered architecture (regional FTAs)
• We get it
– “We have to lead, and our engagement must extend to
governments, business, and peoples across the Pacific.” (Obama)
– “The United States is back in Asia… back to stay.” (Clinton)
– “We want to be in the game in Asia.” (Geithner)
Slide 8
Crucial 18 months
• APEC: Japan 2010, US 2011
• US legislative window: early 2011
• Three dreams
– KORUS
– Trans-Pacific Partnership
– A fruitful Hawaiian APEC
• Investment: investment principles
• Environment: trade and technology transfer
• Demographics: future capital, people flows
• Inclusion: spotlight on women
Slide 9
APEC timeline
• Japan
– June 2010: SOM2, trade, energy
– September 2010: SOM3
– November 2010: Leaders’ Meeting (Yokohama)
• US
– December 2010: informal SOM
– Mid 2011: SOM2, trade, energy
– November 2011: Leaders’ Meeting (Honolulu)
Slide 10