Long-term Economic Growth Still Positive

Kyung Tae Lee, chair of the APEC Economic Committee (EC), observed that the medium and long-term growth prospects for the APEC region as a whole are promising - despite the difficulties posed to global economy brought by the terrorist attacks and ensuing war against terrorism.

"The terrorist attacks and the subsequent war against terrorism will postpone the recovery of the global economy, but the impacts will be short-lived," Lee said at the committee's press conference yesterday in Shanghai.

His view was echoed by Elley Mao from Financial Services Bureau of the Hong Kong, China.

"There is a general consensus that the recovery of the global economy will be slower than previous forecast," she said. "But the short term reaction will settle down and things will go back to normal levels."

At present, along with fading expectations for an early pick-up in the world economy in 2002, some analysts have slashed their global growth forecasts by about 1 to 1.5 percentage points, from the pre-September forecast of around 3.5 per cent.

But oil prices, after several sharp movements in the days following the incident, appear to have stabilized.

And the speakers revealed some positive news for APEC member economies.

"Underlying inflationary pressure has been relatively subdued in the APEC region, giving room for more macroeconomic policies to counter the slowdown," said Kyung Tae Lee.

Mao also believed that the region is in a relatively stronger position to withstand the shock.

"The fundamentals of economies in the region remain sound," she said. "The reforms and restructuring of many emerging economies after the 1997 financial crisis should have put these economies in a stronger position to withstand the current economic slowdown."

At the press conference, the speakers also introduced two timely reports from the committee: "APEC Economic Outlook" and "The New Economy and APEC."

For its topical structural issue, this year's Outlook report takes a look into the nexus between financial development, financial efficiency and economic growth and affirms the significance of fiscal efficiency in ensuring stability and promoting long-run growth and prosperity.

"The sheer expansion in size is not as important as improving the quality of the financial system," said Mao, who coordinated work in producing the Outlook report.

On the subject of the new economy and the APEC, Daniel Rosen, the co-writer of the report, from the Washington-based Institute for International Economics remarked that the new economy is not just about technology but how it is used to transform the activities of individual business and the government.

He emphasized the importance on developing a facilitating policy environment.

"Without the policy foundations, IT is less valuable, often of no value, and sometimes only a cost with no return."

According to the chair of the APEC EC, the two reports were submitted to ministers yesterday morning.

The committee was established at the Sixth APEC Ministerial Meeting in Jakarta in November 1994, when the ministers agreed to transform the AD Hoc Group on Economic Trends and Issues into a formal policy committee.

The committee is responsible for research on economic trends and issues in the APEC region, and serves as a forum for member economies to exchange information and views.






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