APEC ministers agree to no more trade barriers
Global growth will probably be slower and less balanced than desired, ministers from the Asia-Pacific Economic Co-operation member economies said as they agreed to refrain from raising new barriers to trade and investment.
The world economy was too weak and "risks remain tilted to the downside", ministers from the 21-member grouping said in a statement in Bali on Sunday.
The Asia-Pacific region would have a harder time preserving growth, given volatility in financial markets and a slow recovery in advanced nations, said Moody's Investors Service.
"What we are sensing is that there is a change in the economic cycle and sustaining the levels of economic growth that we have seen in the region over the last five years is going to become more challenging," Michael Taylor, Moody's chief credit officer for Asia, said. The region still had a "long way to go" to shift from export-led growth to that driven by domestic demand, he said.
A slowdown in China and India is reverberating throughout the region with the Asian Development Bank forecasting expansion at a four-year low in 2013, putting pressure on policymakers to bolster their economies. The Group of 20 countries repeated their concern last month that stimulus pullback in developed nations might prove damaging to global markets.
APEC members must work to prevent protectionism and improve infrastructure to facilitate trade and investment, Indonesian President Susilo Bambang Yudhoyono said in a speech in Bali on Sunday to about 1000 business executives. Giving in to protectionist tendencies would make things worse for all countries, Singapore Prime Minister Lee Hsien Loong said at the same event.
Trade ministers are seeking momentum during the Bali meetings on a 12-nation trade pact as concessions sought by countries threaten to delay completion further from the end of 2013. The Trans-Pacific Partnership, which includes the US, Australia, Japan, Malaysia and Vietnam, would link an area with about $28 trillion in annual economic output.
"The pattern of aggregate demand is changing in the region, but it is not great enough to drive growth at the same pace as before the crisis," the Pacific Economic Co-operation Council said on Sunday.
"While investment has been increasing, some of this is due to the very cheap cost of capital during this extraordinary period," the council said. "As long-term interest rates return to normal, more needs to be done to improve the investment climates in our respective economies."
China needed more economic and financial reforms, while structural changes in Japan were essential for the country to grow, Mr Taylor said. For Malaysia, Moody's senior analyst Christian de Guzman said risks were tilted to the downside.
Malaysian Prime Minister Najib Razak raised subsidised fuel prices for the first time since 2010 last month and has said he will delay some infrastructure projects, seeking to contain the budget gap after Fitch Ratings cut Malaysia's credit outlook to negative in July. The government is considering a goods and services tax.
"While we do have a stable outlook, there has been deterioration in Malaysia's credit profile over the past five, six years," Mr Guzman said. "If the measures announced in the budget are not strong enough to move the needle, we may reconsider the rating."
APEC ministers said they would recommend their leaders extend until the end of 2016 a commitment to combat protectionist measures and roll back such policies that already exist.