This past weekend, I attended and addressed the APEC (Asia-Pacific Economic Cooperation) CEO conference in Honolulu. Don’t envy me for having spent 48 hours in a tropical paradise—my entire time there was spent listening to views on the global economy (although I did catch a brief glimpse of Waikiki Beach from my hotel window).
APEC is a semi-official organization that provides a forum for consultation and negotiation of economic and trade issues among its 21-member nations. Attendees and speakers included some dozen heads of state and government (including our own president), senior executives of multinational corporations with business interests in the Asia-Pacific region, finance officials and trade negotiators, and a few so-called “thought leaders,” of which I was honored to be among.
Much of the formal discussion concerned some fairly technical trade issues, such as the fate of the moribund Doha Round of global trade negotiations, Russia’s potential ascension to the World Trade Organization, and development of a new multi-lateral trade consortium called the Trans-Pacific Partnership (TPP). However, the condition of the global economy, especially the festering debt crisis in Western Europe—a region not formally represented at APEC—was a major undercurrent throughout.
Two themes emerged regarding Europe. The first was a pervasive concern that a “disorderly default” would disrupt global financial markets and stymie growth in Asia and Latin America. Europe remains an important export market for many of the countries represented at the conference and an important indirect market for those countries who export raw materials to the Europe-bound exporters. APEC members are concerned that their economies—still working to deliver prosperity to heavily impoverished populations a decade or more after their own currency and credit crises, and three or four years after the U.S. financial meltdown—will now suffer again from a problem not of their own making.
The second theme follows from the first. Government and business leaders—particularly from East Asia and Latin America—used the most diplomatic language to express their considerable frustration with the European debt issue. Latin Americans and Asians dealt with their own sovereign debt and economic competitiveness problems years ago by accepting the harsh realities of devaluation and debt restructuring. Although the immediate results of those actions were painful to endure, it ultimately led to a surge in prosperity they’ve enjoyed over the past decade. Now, pressure seems to be mounting for the prosperous among the emerging economies to use their hard-won surpluses to rescue the Europeans. We can appreciate their annoyance.
The contradiction between these two views—that Europe should accept the economic pain of unsustainable debt versus the consequences of default could result in unacceptable costs for their trading partners—further underscores the intractable problems the world economy now faces. But that’s not my most prominent take away from the conference.
The striking and refreshing impression I carry back from (reportedly) beautiful Hawaii is that in spite of these daunting issues, the growing economies of the Pacific region offer an optimistic and energetic view of economic growth and human progress. I don’t deny that the U.S. and, more immediately, Europe, must deal with critical and potentially painful issues regarding the continent’s economic growth potential, and I recognize that Western investors still have a lot to learn about the pitfalls of investing in East Asian and Latin American businesses. Nevertheless, I am more impressed than ever that investors face a world whose opportunities have only begun to blossom.