Feature Presentations
Covid-19 pandemic’s socioeconomic impact
Dr. Rajiv Kumar, Vice Chairman of NITI Aayog, a policy think tank of the Government of India, delivered the Keynote Address. Dr. Kumar pointed out that the Covid-19 pandemic had a huge impact on both the economic and social sectors, with the government policies aimed at keeping a balance between saving lives of the population while maintaining their livelihoods as well.
Moving forward beyond Covid-19, Dr. Kumar said he expects the Asia-Pacific region to remain resilient and will continue to be the driver of global growth. the method of measuring a country’s GDP growth should first of all also take into account the well-being of the people, emphasizing the social aspect of economic growth. For instance, there should be policy measures aimed at reducing the gap between the formal and the informal sectors, reducing or eliminating the dualism between these two sectors.
Secondly, growth should also consider the impact on the environment. The government cannot finance economic growth at the expense of the so-called natural capital. One should aim to achieve not only financial profits but resource profits as well. For instance, policies should give importance to sustainable agricultural production by employing, for instance, chemical-free farming.
Thirdly, governments should use the current health crisis to lay the foundation for growth going forward. Among others, policies should give more space to private entrepreneurs, both foreign and local; create trust between government and the private sector; pursue self-reliance by providing domestic entrepreneurs the best investment environment through infrastructure, logistics and production links; and provide incentive schemes to be done in the global context, i.e., with the eye on gaining market share both regionally and globally.
Asian Development Outlook: A Precarious Path to Recovery
Mr. Abdul Abiad, Director, Macroeconomic Research Division, Economic Research and Regional Cooperation Department at the Asian Development Bank, spoke on the topic “Asian Development Outlook: A Precarious Path to Recovery.”
Mr. Abiad’s presentation highlighted the following key messages:
- Developing Asia will contract by 0.7% this year, its first contraction in six decades.Growth will rebound to 6.8% in 2021, but this implies only a partial recovery.
- The downturn is broad-based – three-fourths of the region’s economies are expected to contract this year, with China as an important exception.
- Risks to the outlook include the possibility of a prolonged pandemic, geopolitical tensions, and unclear long-term socio-economic impacts.”
- The global pandemic persists, with second and third waves in Europe and the US, respectively.
- South Asia is the epicenter of the pandemic in developing Asia, but the situation there is improving.
- Containment measures of varying stringency have been imposed, and intensity of containment measures is strongly correlated with declines in mobility and domestic activity.
- Trade plummeted, but has already bottomed out, and Asia’s trade fell less than global trade as exports of health supplies and electronics have supported the region.
- Growth slumped in the first half of 2020 as consumption and investment contracted.
Asian governments have stepped in with a wide-ranging crisis response of about 15% of regional GDP, half of which was for income support. - Regional GDP will contract this year, for the first time in nearly 6 decades, and the decline is broad-based, affecting three-fourths of the region’s economies.
- Risks remain tilted to the downside, with the main risk being a prolonged pandemic (extended first wave, or recurrent waves) which can stifle recovery, and which could trigger crises in some economies.
- Other risks include worsening of geopolitical tensions, most notably intensified US-China frictions over trade and technology.
- There is an upside risk from early vaccine arrival, but this is tempered by a potential for“vaccine nationalism”.
- The long-term effects of the pandemic are unclear – it can affect growth potential, income inequality (including through unemployment and the digital divide), and trade.
- Developing Asia will still drive global growth post-Covid.
The Challenge of Restoring the Multilateral System
Dr. Andrew Stoeckel, Honorary Professor, Centre for Applied Macroeconomic Analysis at the Australian National University, elaborated on the topic “The Challenge of Restoring the Multilateral System.”
Highlights of Dr. Stoeckel’s presentation included the following main points:
- Open, predictable multilateral trading system is under threat.
- Globalization is potentially in reverse at potentially high cost.
- The rules themselves – too many inconsistencies, contradictions, ambiguities and exemptions as well as concept of reciprocity as basis for negotiation
- Trade rules used to remedy problems they cannot fix. Labor standards, environment, human rights, and more are all creeping into the agenda
- Thins change and “new” issues to deal with (digital economy, e-commerce, internet standards, rising capital flows as driver of trade)
- Declining hegemony by US and the rise of China, giving trade war fueled by protectionist President Trump.
- Identify the problem
- Show why it matters (the motivation to fix it)
- Correct diagnosis pf causes
- Devising remedies to best solve problems
- Publicize awareness of solutions
- Agreed baseline tariffs applied to all
- End the FTA ‘land grab’ undermining WTO’s core MFN principle
- End special and differential treatment for large and advanced economies
- New rules to stop distortions from China’s state capitalism
- WTO’s dispute settlement system to be totally re-thought
- Trade share of world output nearly doubles in 30 years to 2008 (facilitated by open, predictable multilateral system administered by the WTO)
- But since 2008 trade growth has stalled (Partly caused by two global recessions – GFC and COVID-19- but also caused by several factors undermining the world trading system, most recently visible in US-China trade war and collapse of WTO’s Appellate Body)
- Result is WTO in disarray and on-going scramble to form PTA’s (But PTA’s
have many disadvantages and some leave countries worse off) - World cannot afford low growth option (Attempts will be made to restore open, predictable multilateral trading system, but things have changed so what rules and disciplines for maximum prosperity?
China-US Trade Friction and the Impact on Global Economy
Mr. Richard Koo, Chief Economist at Nomura Research Institute focused his presentation on “China-US Trade Friction and the Impact on Global Economy”.
Mr. Koo’s presentation underscored the following points:
- Japan used to be where China is today vis-à-vis the U.S.
- US demanded massive changes to Japanese economy in US
- Japan structural impediment initiative (1989-19190).
- Price mechanism (Exchange rate are not reflected on final selling prices in Japan)
- Distribution/logistics (Imports encounter difficulty in entering Japan’s distribution systems)
- Savings and investment (Japanese are forced to save while social infrastructures remain inadequate)
- Land Usage (Land is not efficiently used, depressing domestic demand)
- Keiretsu (Japanese companies buy mostly from companies with cross-held shares)
- Exclusionary Business Practices (Intellectual property rights of foreign companies are not fully protected)
- President Trump (until March 2020) [ Need a level playing field to reduce US trade deficit with China. President Xi-Jinping, a strong leader, is a worthy counterpart for negotiations.
- The rest of Washington (since June 2019) – China led by President Xi betrayed the US by moving away from open society and pushing for territorial expansion in South China Sea and elsewhere. All efforts are needed to contain the Chinese threat to the post-war global orde
- Strong dollar responsible for US trade deficits
- China may grow old before it grows rich. Working age population has started to contract in China.
- China only has 11 years to reach first-world living standard
