On June 15, Irina Gorbulina, Head of the FBA EAC Representative Office in Australia and New Zealand, took part in a virtual round table
On June 15, Irina Gorbulina, Head of the FBA EAC Representative Office in Australia and New Zealand, took part in a virtual round table "Promoting structural reforms for sustainable economic growth in the Asia-Pacific region".
The Round table was organized to assist members of the APEC Business Council in developing recommendations on structural reforms for APEC finance Ministers.
The round table was held at the initiative of the Pacific Economic Cooperation Council (APEC) (Pacific Economic Cooperation Council (PECC), the Business Council of Japan (APEC) and Daiwa Research Institute.
He main speakers were Mr. Hiroshi Nakaso, Chair, ABAC Finance and Economics Working Group, Dr. Richard Cantor, Co-Chair, PECC; and Vice Chairman, Moody’s Investors Service, Dr. James Ding, Chair, APEC Economic Committee , Mr. Eduardo Pedrosa, Secretary General, Pacific Economic Cooperation Council (PECC).
The main topics of discussion concerned the problems faced by the economies of the Asia-Pacific region today and the role of international organizations in solving them. In particular, the following was stated. Currently, the Asia-Pacific region is at a crossroads. There is growing pressure on the economy to accelerate its transition to sustainable environmental, social and governance structures. The ongoing data and digital revolution brought to the forefront by COVID-19 is forcing businesses, governments and consumers to transform significantly their operating models. Unlike Europe, where there is a supranational structure, the economies of the Asia-Pacific region respond to these challenges with the help of domestic policy with very limited coordination. Compounded by recent conflicts that threaten to create competing international economic, regulatory and market mechanisms, the forces of economic fragmentation have prevailed over APEC's desire for regional integration.
This new reality has overlapped with APEC's ongoing efforts to promote structural reforms. Structural reforms are defined as measures aimed at changing the structure of the economy, as well as the institutional and regulatory framework within which enterprises and individuals operate, in order to ensure the possibility of a balanced disclosure of the potential of economic growth. Structural reforms aimed at influencing the supply side of the economy usually target one or more of the four areas: commodity markets, labor markets, framework conditions and trade barriers.
Calls for structural reforms in the region are growing louder as the era of rapid growth has been replaced by a period of more modest growth or, in some cases, stagnation, often caused by economic crises. It has been argued that underlying this current economic reality is the deterioration of potential growth rates in many countries, which has manifested itself in the inability of central banks to effectively implement monetary policy to facilitate recovery from the global financial crisis. Structural reforms can solve this problem by restoring productivity.
The experience of structural reforms around the world reveals many problems faced by such efforts and factors affecting their viability. These may include, but are not limited to, fiscal policy (e.g. fiscal consolidation or expansion), monetary policy (e.g. high or low interest rates), political environment (e.g. election timing, majority in the legislature, political orientation of the leadership), economic environment (e.g. stability, recession, unemployment) and external factors (for example, financial assistance programs).
A study conducted by the European Central Bank (ECB) on the impact of various factors on structural reforms in the euro area showed that countries are generally more likely to implement such reforms in a recession, high unemployment or low growth potential.
The region's economy managed to avoid a recession during the pandemic thanks to vigorous fiscal and monetary policy measures by governments. However, the resulting record levels of public debt, the difficult fiscal situation and the highly inflated balance sheets of central banks currently limit the ability of most governments to provide additional incentives or respond to new crises. Now they are also facing inflation caused by supply-side factors, such as the impact of the pandemic and geopolitical conflict on global supply chains and food and energy prices. These factors, combined with increased unemployment and low growth potential, give new urgency to the call for structural reforms that the region needs to achieve a sustained economic recovery and future growth.
Although APEC has been steadily advancing structural reforms since 2004, everyone agrees that more needs to be done. In its APEC Structural Reform Statement of 2021, PECC highlighted the findings of its survey that there is a broad view among policy experts that not enough work has been done on structural reforms in the region's economy since the global financial crisis. In its report to the APEC Ministerial Meeting on Structural Reforms, the Business Advisory Council stressed the urgent need for structural reforms aimed at addressing the urgent challenges of recovery after COVID-19, as well as the medium-term challenges of responding to technological evolution and climate change.
This round table aimed at helping to find solutions to these problems by identifying priority areas (especially those related to the promotion of sustainable development and inclusive digitalization) that can be the focus of concerted action by APEC economies in cooperation with other relevant stakeholders, including business. Taking into account APEC's mission to promote regional economic integration through free and open trade and investment, discussions focused, among other things, on how structural reforms can be carried out in these priority areas in such a way as to lead the region away from fragmentation to greater cross-border interaction.