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SINGAPORE: The Asia-Pacific Economic Cooperation or APEC's role in promoting free trade will become more important post-financial crisis as the Asia Pacific is set to drive global growth, said Singapore's Prime Minister Lee Hsien Loong on Friday.
Speaking at the APEC CEO Summit in Singapore, Mr Lee said while leaders are confident that the worst of the crisis is over, how quickly economies recover will depend on government measures in the next few months.
At the opening of the summit, Mr Lee noted that much has been achieved over the past 20 years for APEC member economies. There are now 40 free trade areas within APEC.
"In some member economies, there has been an astonishing rise in prosperity in 20 years, more than doubling or tripling of their per capita GDPs. These are all clear evidence of free trade and globalisation," he said.
Asia, the IMF predicts, will lead the global recovery. It has estimated that Asia will grow by 6 per cent and the G3 economies by 1.2 per cent next year.
Mr Lee said Asia can expect high growth if members avoid taking protectionist measures and keep their markets open.
"We worry that high unemployment may weigh down on incomes and consumption. We know that economies have to build up their long-term capabilities and upgrade the skills of their workforce because that's the only sustainable way to keep growing, keep improving standards of living, not only for a small elite but for a broad segment of population in all our countries," he said.
One initiative that can help is to build on the idea of a free trade area of the Asia Pacific, and Mr Lee believes economies can work towards this vision by pushing ahead with the Trans-Pacific Partnership, which currently brings together Brunei, Chile, New Zealand and Singapore.
Four more economies – the United States, Australia, Peru and Vietnam – have expressed their interest to join this partnership.
As for the health of the global economy, Mr Lee said there is a clear but modest recovery, though he cautioned that risks remain, particularly in the monetary and financial system. He said economies have to gradually unwind stimulus and financial measures.
He said: "The more difficult part is the monetary part and the financial system part. The monetary part because if you withdraw the monetary stimulus too late, you risk inflating a bubble... But in Asia, we have seen stock markets go up, we have seen property markets go up, and it is connected to the global monetary conditions.
"We have to manage with it now and live with the difficulty, but if it becomes a significant and widespread bubble because we defer the monetary tightening for too long, you will have a serious problem.
"One of the things governments did last year was to guarantee bank liabilities... given what was happening around the world, if we didn't act, we were going to have a problem in Singapore because at a click of a mouse, several hundred million dollars can travel from point A to point B, and some banking system would find itself under great stress.
"But how to withdraw that in a coordinated way so that in the process of withdrawing it, we don't have deposits and assets slushing around from country to country and destabilising the system?"
Mr Lee told his audience of international leaders that the process was going to be a very delicate exercise which governments would have to discuss over the next year.
More than 1,500 corporate chiefs are attending the two-day APEC CEO Summit.
- CNA/so
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