Crisis shifts balance of economic power to Asia

The world economic crisis is expected to shift more economic power to Asia, where signs of recovery are showing sooner than elsewhere, the World Trade Organization’s chief economist predicted Monday.

By (DPA)

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Published: Mon 10 Aug 2009, 4:41 PM

Last updated: Thu 2 Apr 2015, 2:52 AM

“The crisis has changed the world,” Patrick Low, WTO chief economist, said at a press conference in Bangkok.

“I think it’s going to shift the balance of relative power (to Asia), precisely because of the manner in which this region is recovering.”

The WTO economist acknowledged that the world financial crisis has not been as severe in Asia as anticipated, particularly in the region’s largest economies such as China and India.

Even so, the trade organization’s chief economist warned of several looming dangers to the region.

“There is a question of whether or not we’re going to have a double dip because of the need to bring prices back in control if inflationary pressure picks up as a consequence of all the stimuli that have been exercised in the region,” Low said. “We’re not quite out of the woods yet.”

He said the WTO fears that the worst crisis since the 1930’s Great Depression may significantly alter attitudes towards free trade.

“The issue is really about whether attitudes towards trade, attitudes towards globalization, financial regulations, savings behaviour in large economies, whether these attitudes are going to change in such a way as to essentially create a long-term de-globalization in the world economy,” Low said.

The WTO projects global trade will shrink 10 per cent in 2009.

The trade organization, which has been trying to push through the Doha Round of a new global trade agreement since 2001, is hoping that negotations will be finalized next year.

“So far, although there have been some protectionist noises in the underbrush, it’s fair to say governments have been impressively restrained with respect to resorting to protectionist measures,” Low said.

“Some people think that the crisis can concentrate minds in the negotations, but that we haven’t quite seen yet.”

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