25 May, 2012

Asia-Pacific Speaks: “G20 Has Made Little Progress in Strengthening Global Growth”

Dr Noeleen Heyzer

Opening Statement Delivered by Dr. Noeleen Heyzer, United Nations Under-Secretary-General and ESCAP Executive Secretary at the 3^rd High Level Consultation on the G20 Cannes Summit, organised during the 68th Session of the ESCAP Commission, Bangkok, Thailand, on 23 May 2012

In October last year, representatives of 28 ESCAP member States convened here in Bangkok, at the second high-level consultation, to discuss Asia-Pacific perspectives on the agenda of the G20.

It is important for the Asia-Pacific region to use its collective influence in global fora, such as the G20, to strengthen its role in shaping global policies that are vital to further development. So it is with great pleasure that I welcome you to the third Asia-Pacific consultation on the G20 summit agenda. I look forward to a very productive meeting this morning.

Excellencies, Ladies and Gentlemen,

You may recall one of the key messages of last year’s consultation: that the G20 leaders need to send a clear signal that achievement of key developmental objectives and other policies to foster sustainable development must occupy a central place of concern in sustaining growth.

This is especially important to the Asia-Pacific region, where inclusive development policies to lift the poor out of poverty will be a critical part of the global rebalancing process.

Unfortunately, the G20 has made little progress in strengthening global growth. Indeed, the world economy has entered a second stage of the crisis due to the eurozone debt crisis and continued uncertain economic outlook of the US economy. Concerns about loose monetary policies in the advanced economies leading to large short-term capital inflows and financial and commodity prices volatility have therefore yet to abate.

Much is at stake for Asia and the Pacific in the upcoming G20 Summit, as all countries are affected by this important agenda, which ranges from economic stabilization to financial regulation and green growth. We need to ensure that the outcome of this global process benefits our region and helps create a supportive environment for our countries to pursue their development. These consultations are an opportunity to share the views of member States and to identify the areas where greater coordination and support are needed.

Although growth in 2011 has slowed, the Asia-Pacific region continues to lead the global recovery. Indeed, it remains the most dynamic region in the global economy. It is time, therefore, for the region to also play a key role in leading global discussions and particularly in setting some of these agendas. This can only be done through a coordinated regional voice.

With greater coordination of our positions, we can shape the outcomes of the process more effectively. I therefore welcome participation of G20 members and non-members in this consultation and hope that this initiative of consultation will be institutionalized.

Excellencies, Ladies and Gentlemen,

Allow me to briefly offer some of my thoughts on the five key issues on the agenda of the upcoming G20 summit.

First, on economic stabilization and structural reforms as foundations for growth and employment: while the Asia-Pacific region leads the global recovery, markets in advanced economies remain vital to many member states. Given the current weak global environment, there is an urgent need for reforms that revive growth and create jobs in the whole global economy.

As highlighted by the ESCAP Economic and Social Survey 2012, in many countries this will entail loosening the fiscal austerity and also to address the ongoing unemployment crisis and ultimately derailing the global economic recovery.

In this regard, it is important that we remind ourselves, and our trading partners, to resist taking actions to protect domestic markets from problems that are essentially unrelated to trade. I am talking here of the types of protective trade measures that have been introduced by the G20 and that have already led to export losses totaling USD$13 billion for the Asia-Pacific region.

Such restrictions have had a particularly adverse impact on the most vulnerable countries in our region, the least developed and the landlocked developing countries and the small-island developing states.

Second, on strengthening the financial system and fostering financial inclusion: let me say that an adequate regulatory and supervisory framework of the financial system must be established to avoid a repetition of the problems that led to the crisis.

However, this has implications for financial flows to developing countries and is likely to limit access to financing. It is therefore important that an impact assessment be undertaken on how financial market reforms will affect poor developing countries that are highly dependent on external financing and whose domestic financial markets are at an early stage of development.

At the same time, as highlighted by the Commission two years ago in the theme study on financing an inclusive future, fostering financial inclusion in the Asia-Pacific region is a critical factor in strengthening domestic demand and rebalancing the global economy, as only a small portion of the population has access to formal financial services across the region.

Third, on reforming the international financial architecture: it is important that the region exert its influence for building a more development-friendly international financial architecture through discussions in the G20. Low interest rates in reserve currencies and expansionary monetary policy in developed economies are fuelling volatility in financial and commodity markets, thereby undermining our development gains.

It is also important for us to continue to advocate for the establishment of a global reserve with a stable value, rule-based issuance and manageable supply that could be issued counter-cyclically to safeguard global economic and financial stability.

We should also advocate for an increase in the flexibility of lending facilities of the international financial institutions to cover developing countries that may not meet all the conditionality requirements. We must continue to develop our own regional crisis prevention and response facility by, for instance, increasing the scope and coverage of the Chiang Mai Initiative. In this regard, I am glad that the Commission this year has considered how to advance the regional financial architecture.

Fourth, on enhancing food security and addressing commodity price volatility: food security and commodity price volatility have been at the top of G20 agenda. High inflation and food prices remain a major challenge across much of the Asia-Pacific region. As ESCAP has pointed out, an additional 19.4 million people were kept in poverty in Asia–Pacific by the rise in food prices of the second half of 2010, which hit the most vulnerable people hardest and increased hunger and poverty in this region.

To reduce food prices in the long term, we must increase agricultural productivity. The region must support agricultural research and development to foster what I call a new, knowledge-intensive “green revolution”, a second green revolution, which would make agriculture more environmentally sustainable while enhancing its productivity.

At the same time, regulations to prevent speculation on commodity derivative markets must be strengthened. We must call upon the G20 to implement appropriate decisions for better regulation and supervision of agricultural financial markets.

Fifth, and finally, on promoting sustainable development, green growth and the fight against climate change, we must recognize that although the strong growth of the Asia-Pacific region has lifted more than half a billion of its people out of poverty over the last two decades, it has also contributed to social inequalities, a significant expansion in consumption of the earth’s natural resources and to climate change through the production of greenhouse gases.

We need to strive to make our growth more sustainable and greener, that is, to use fewer resources, improve energy efficiency and simultaneously increase access to modern energy resources. We need to make our growth more equitable and sustainable.

To support this goal, ESCAP recently released our Low Carbon Green Growth Roadmap, providing a wide list of practical implementing strategies countries may consider adopting, based on national priorities and circumstances. I am also pleased that the Commission session has provided an opportunity this year to discuss the creation of a new ‘smart-grid’ or what I call the Asian Energy Highway, to better share our electricity resources.

The G20 summit will be an important opportunity to mobilise resources for green growth technology, and we need to rebalance our economies and societies to better align growth patterns with the pursuit of inclusive and sustainable development objectives. However, we also need to be aware of the short-term costs of a green transition, as patterns of employment will certainly be affected.

Excellencies, Ladies and Gentlemen,

In conclusion, thank you again for your participation in this consultation. I am confident that this session will serve as an important platform for advancing Asia-Pacific perspectives on the G20 agenda.

Broad-based consultations on global issues such as these are important opportunities for the non-G20 countries of our region to communicate their views to our eight member states represented at the G20 summit.

It is also important that global processes support national development strategies and regional priorities, and for the Asia-Pacific region to play its role in global discussions shaping our shared future. This is especially necessary as our region remains the anchor of stability and the new growth pole for the world economy.

We must consider the perspective of more marginalized countries in the global discussions, as their outcomes affect all countries irrespective of size or relative economic strength.

Given the global membership of the United Nations, ESCAP, its regional development arm in the Asia-Pacific, is a natural partner to facilitate these discussions and we are very pleased to host any of these discussions moving forward.