APEC economies to sustain region's economic rebound

APEC economies to sustain region's economic rebound

BANDAR SERI BEGAWAN (AFP): Asia-Pacific economies will sustain the region's economic rebound but potential minefields lay ahead in terms of rising oil prices and a slackening in global demand, a report released here Wednesday said.

"There are clear indications that the economic recovery that started in early 1999 can be sustained in the short-term period as the Asian crisis appears to have fully run its course," the report said.

The report was released ahead of a gathering of senior trade officials and diplomats from the Asia-Pacific Economic Cooperation (APEC) forum here on Thursday.

The three-day Senior Officials' Meeting (SOM) will set the agenda for the annual summit of APEC leaders in oil-rich Brunei in November.

Strong global demand for electronics and information technology goods was the driving force in the recovery, bolstered by the continued strong growth in the United States -- the major export market for these items.

Based on a consensus forecast for this year, APEC economies "are expected to recover from the crisis and post considerable growth in gross domestic product," the report said.

However, it cautioned that a large part of the growth would depend on "stronger global demand as influenced by the U.S. economy, and a possible rebound for the Japanese market."

While the U.S. economy continues to boom, "there are indications that U.S. equity valuation remains abnormally high" which could lead to a sharp fall in U.S. stock prices.

The U.S. current account deficit also continues to widen and could lead to a depreciation of the dollar if funds prove inadequate.

"Together, the fall in equity prices and depreciation of the U.S. dollar could lead to a significant slowdown in the U.S. economy.

This would have considerable impact on the world economy since the U.S. has accounted for 50 percent of global demand," the report said.

Another "risk factor" is an increase in U.S. interest rates as well as the spriralling oil prices in the world market which could lead to inflationary pressures, it said.

Oil prices reached new 10-year heights of U.S.$37 a barrel this week despite a pledge by oil producers to increase output.

"This will further erode the purchasing power of crisis-hit currencies, affecting consumer spending," the report said. Political conditions in individual countries and the pace of economic reforms were also crucial to the recovery process, it said.

Internet

Asia-Pacific economies will put their individual action plans (IAPs) on lowering trade barriers on the Internet by November to encourage transparency, officials said Wednesday.

The e-IAP project is expected to be launched during the Asia- Pacific Economic Cooperation (APEC) forum summit in Brunei in November.

A statement ahead of a three-day meeting of APEC senior trade officials and diplomats said the committee on trade and investments will report on the progress of e-IAP -- a joint undertaking by Australia, Brunei and Singapore with software giant Microsoft Corp.

The project aims to encourage the 21 APEC members to put their IAPs on the web.

IAPs contain the voluntary commitments of each APEC member to tear down trade barriers in line with the overall APEC objective of free trade and investment in the region by 2010 for industrialized economies and 2020 for developing ones.

APEC leaders meeting in Auckland, New Zealand last year agreed with a view from the private sector that the IAPs should be "more specific, transparent and comprehensive."

Trade ministers who met in Darwin, Australia in June said putting the IAPs on the Internet would facilitate "wider, faster and easier online access to transparent, comprehensive and specific accounts of the progress" economies were making in their commitments.

APEC economies have been conducting regular "peer reviews" of the IAPs of fellow members.

APEC groups Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the United States and Vietnam.