The report on the state of the region is the result of a working group established by the governing body of PECC. Eduardo Pedrosa (Secretary General, PECC International Secretariat) State of the Region Report online: www.pecc.org/sotr. Nevertheless, downside risks are high in the current forecast, based on the positive effect of liquidity injections in the US and other liquidity injections that took effect in the first half of 2009, resulting in a modest recovery.
In the short term, the focus for Asian governments will be to defend against further contagion effects from the US financial market and credit crisis. The global recycling of surpluses held by Asian and Gulf states will become more urgent as funds are needed to recapitalize the US banking sector and finance the US government's massive deficit. As the credit crunch subsides, interest rates in the US will need to rise to attract investment capital from the rest of the world.
Nevertheless, the Japanese economy has only recently emerged from a prolonged period of deflation and is once again facing the possibility of falling prices due to a slowdown in global growth. Responses were overwhelmingly negative, suggesting that the economic outlook for the Asia-Pacific region has changed over the past year, in stark contrast to the 2007 State of the Region survey. Less than a percent of respondents expect economic growth in which of the regions is much stronger.
In North America, 89% of respondents saw the US recession as the main very serious and serious risk, slightly higher than the rest of the regions and overall.
Regional Economic Integration
The highest priority for trade liberalization in the region was given to the harmonization of rules of origin under overlapping bilateral and regional FTAs (73%), followed by the liberalization of cross-border FDI. Respondents from South America were most concerned about the rule of origin while North Americans were least concerned. There were considerable differences between sub-regions in their priorities for liberalisation, particularly views on the importance of eliminating barriers to trade in services.
Respondents from North America, Australia and New Zealand tended to prioritize trade liberalization in other services, while respondents from East Asia gave this topic a much lower priority. Report on the state of the region Question 6: How do you assess the suitability of the following groups of economies for creating a free trade area? Respondents preferred ASEAN and ASEAN Plus Three when asked which economies would be most suitable for creating a free trade and investment area (63% and 58% of respondents, respectively, considered them suitable to very suitable for creating a free trade and investment area). a free trade zone).
How would you rate the suitability of the following groups of economies to create a free trade and investment area. respondents by subregion who thought the following groupings were suitable to very suitable for the establishment. of a free trade and investment area). The five regions represented in the survey have similar perspectives on regional economic integration and rate ASEAN as the most suitable grouping for a free trade and investment area. However, there was variation in the second best fit grouping, with most sub-regions ranking ASEAN+3 second with the exception of South Americans who ranked APEC second.
Interestingly, North American respondents did not share this view with a significant proportion thinking that the ASEAN+3 grouping was better suited to the creation of a free trade area and still ranking membership of the East Asia Summit better has as APEC's membership. Given the turmoil on the financial markets, it should come as no surprise that the provision of liquidity support in the event of financial crises has been the best area for strengthening regional cooperation. Tariff barriers ranked second highest, followed by the environment, which then reduced the cost of doing business, with the top five issues rounded out equally by energy security and food security.
In general, this is consistent with the findings in question 12 on priorities for APEC leaders, with the exception of strengthening the APEC institution, which does not appear in this list.
Regional Institutions
The three questions, which are comparable across the three years of the survey, show a slight difference in the answers, with slightly fewer respondents seeing the East Asian summit as a threat to APEC. The status report There are slight differences when looking at the role of the regional institutions across regions. There was strong support from South American respondents, with 86 percent agreeing that an Asia-Pacific free trade area should be negotiated, but only 63 percent of South American respondents agreeing that a free trade agreement should be created for Asian economies.
Of North American respondents, 55 percent strongly disagreed or disagreed with the statement that APEC is as important today as it was at its inception in 1989, while 70 percent agreed that Asian economies should create an institution across the region to promote financial stability. In contrast, 52 percent of Australian and New Zealand respondents agree or strongly agree that APEC is as important today as it was when it began in 1989, while 44 percent think Asian economies should create an institution across the region to promote financial stability. Of the Northeast Asian respondents, 51 percent disagreed that the East Asia Summit will eventually overshadow APEC.
An Asia-Pacific free trade area should be negotiated as soon as possible. There does not seem to be strong agreement on a time frame for either institution. A majority of respondents believed that an Asian Institution for the Promotion of Financial Stability, a Secretariat for Economic-Political Cooperation and a Pan-Asian Free Trade and Investment Area would be established with 68% respectively.
However, respondents were much less certain about the creation of an Asian currency unit or a single Asian currency, with 40 percent of total respondents indicating that a single Asian currency will never be created and 31 percent that an Asian currency unit will never be created .
APEC
State of the Region Report By far the top priority for the APEC Leaders' Meeting was the US financial crisis and its global impact, followed by the Asia-Pacific Free Trade Area, the WTO-DDA, energy security and APEC reform. Although it is still a top 5 issue for most of the sub-regions, including Northeast Asia, North America and Australia-New Zealand, only Southeast Asia and South America do not have climate change as a top 5 priority issue didn't have As the Asia Pacific Economic Cooperation (APEC) forum approaches its 20th anniversary in 2009, there will be renewed discussion of the achievements of the organization over the past two decades.
Since 1998, however, there has been increasing interest in free trade agreements that exist only in Asia, as well as institutions in East Asia and Asia that expressly exclude the other side of the Pacific. The North and South American members of APEC have also pursued ideas of hemispheric integration, particularly the idea of a Free Trade Area of the Americas, albeit with little success. Anyway, the APEC "project" is based on the idea of increasing economic integration across the region - covering both sides of the Pacific Ocean.
Therefore, any measure of the organization's success would require an assessment of whether the region has actually become more integrated. The Cooperation Council (PECC) has developed a series of indicators to measure the degree of economic integration in the Asia Pacific region. This index will be launched as part of the PECC State of the Region Report 2008 to be released at the APEC Leaders' Meeting in Lima in November 2008.
After the bursting of the IT bubble in 2001, regional integration declined or was flat for the next three years, but picked up again in 2004 and 2005. Hong Kong is the most integrated economy with the Asia-Pacific region , followed by Singapore and Chinese Taipei . These three economies held the largest positions for most of the period covered by the index.
Five economies were less integrated with the Asia-Pacific region in 2005 than in 1990: Chile, Chinese Taipei, Indonesia, Mexico and Singapore. An important feature of the index is that it excludes trade and investment flows between geographically contiguous sub-regional trade agreements, namely NAFTA, the ASEAN Free Trade Agreement and Australia-New Zealand Closer Economic Relations. In the case of Greater China, the exclusion of intra-regional flows did not affect the positions of Hong Kong and Chinese Taipei in the top ranking of the index.
On the other hand, the much lower ranking of the People's Republic of China suggests that a large part of its trade and investment flows with Asia-Pacific partners is with Hong Kong and Chinese Taipei, and that its share of trade and investment with countries outside Asia. The Pacific is larger than that of other economies in the region. The index value for the region as a whole can also be seen as a measure of closer economic ties between Asia Pacific economies and as an indicator of APEC's success.
TECHNICAL NOTE ON THE COMPOSITE INDEX OF ASIA PACIFIC ECONOMIC INTEGRATION
Statistics from UniversidD de Chile supplements the update from the Central Bank of Chile. Statistics from the Universidad de Chile supplements the update from the Central Bank of Chile. Trade weights are the total goods (imports and exports) of each country relative to the total trade goods of PEO economies.
The GDP weights are each country's nominal GDP relative to the total nominal GDP of the PEO economies.
