Good
morning, ladies and gentlemen,
It is a great pleasure for
me to welcome you to this Thirteenth Workshop on Asian Economic
Outlook.
In this workshop we will take
stock of the principal economic trends in Asia as well as
in the global economy. As good forecasts help in producing
good decisions—both at macroeconomic and microeconomic levels
this workshop will hopefully help us in making a realistic
assessment of the growth trends in the future.
There are many ways to assess
the present economic situation of our DMCs. Optimists talk
of a robust economic recovery in Asia. A recent survey of
CEOs in Asia reported that leading corporations in Asia
are overwhelmingly bullish about the region’s prospects
and the ability of its capital markets to rebound. As opposed
to this, the pessimistic view is whether Asian economies
are reverting to another crisis. During the course of the
next two days, we shall take a critical look at these and
other different versions about economic outlook of the Asia
and Pacific. We shall also deliberate on policy issues of
immediate relevance for these DMCs.
We notice several recent developments
which are of concern to us as these add to the downside
risk in the developing Asian economies. First, oil prices
have tripled in dollar terms since their low in 1998. This
has worsened external balance for all oil-importing Asian
economies. Second, short-term interest rates have been on
the rise. Third, a global flight from risk is under way.
Fourth, US soft landing is leading to slower global economic
growth. During the course of the Workshop some of you would
surely cast more light on it and other related issues. These
developments add downside risk to growth in the developing
Asian economies.
During
this workshop, among other issues, we shall focus on (i)
Asian recovery and (ii) globalization and Asian economies.
The recovery in 1999 was faster than most of us expected
and last year, during the 12th AEO Workshop,
we talked about the V-shaped recovery in Asia in a buoyant
mood. We continue to believe that recovery in Asia is consolidating.
This was helped by both an export-led economic revival as
well as strong domestic demand. However, performance in
the recovering economies is far from uniform.
During
this year the equity markets in Asia have fallen steeply.
In local currency terms, Indonesian, Korean, Philippines
and Thai equities have fallen by 35 to 40 percent by October.
An important external factor, which affected these equity
markets, was the worldwide correction in prices of information
technology (IT) stocks.
There
are renewed currency depreciations in Indonesia, Philippines,
and Thailand. Although net capital flows into the five crisis
affected Asian economies made a recovery in 1999, they are
forecast to swing back to a negative level in 2000. Certainly,
these and other related issues have been drawn to your attention.
I sincerely hope that analyses in the workshop will provide
the policy makers better insights and will lead to good
policy making in the region.
Another
important issue to deliberate in the Workshop is globalization
and Asian economies. Of late, it has become a highly charged
subject. The public debate on risks and benefits of globalization
seems to be interminable. We feel globalization offers extensive
opportunities for worldwide development. A more integrated
global economy and technological gains brought about by
globalization should be a great source of economic and social
progress, as well as equity and stability.
It
is well known that world trade has grown faster than the
world GDP growth. Increasing world trade and trans-border
financial flows have helped create income- augmenting opportunities
and enhanced interdependence among countries. The IT revolution
has accelerated these trends. It has helped in creating
new jobs in the services sectors and opened up new vistas
for skilled personnel. These new developments call for far
superior co-ordination and harmonization of policies across
countries, especially in areas like finance and banking.
All this has added up and increased the need for following
the right policy.
However,
the benefits of globalization cannot accrue automatically.
Countries have to carry out policy reforms to secure them.
One worrisome feature associated with globalization is its
uneven impact. Some countries are becoming integrated into
the global economy more quickly than others. Slowly reforming
economies are in greater danger of falling behind than others.
In a globalized economy benefits of good policy are greater.
By the same token, the costs of bad policy are higher.
Countries
must be prepared to adopt the policies that will enable
them to benefit from globalization. The poor countries in
the region may need the support of the international community
as they do so.
The
Pacific region faces several challenges and is at a critical
juncture on its growth path. This is an important area of
ADB activity. Towards the end of the 1990s, major economic
reforms were initiated in this region with the assistance
of ADB. These reforms were largely triggered by fiscal crises,
and focused on maintaining fiscal discipline and downsizing
government. The reform program also focused on catalyzing
private sector development and strengthening good governance.
While Pacific economies began to pick up in 1999, the economic
activities were again subdued in 2000 due to political instability
and social unrest in some of the large Pacific economies.
The region needs to successfully adapt to new opportunities
emerging out of globalization and rapid growth IT around
the world. All the efforts are needed to steer the region
to the path of sustainable economic and social development.
Ladies
and gentlemen, I welcome you once again to the ADB and declare
the workshop open. I wish you success in your deliberations.
My colleagues and I keenly await your comments, your analyses
and recommendations.
I
wish you a pleasant stay in Manila and a safe trip back
home.
Thank
you.
FWRD