Current Economic Issues in the Asia-Pacific Region
The economy of most Asia pacific region countries has recently seen a boost in its growth placing it among the fastest growing economy in the world. This growth has however been accompanied by various issues such as inflation and an issue of low currency exchange rate in some countries compared to the US or other EU countries. Countries such as Philippines and Vietnam have suffered low currency power and a risk of inflation when the economy is not monitored and regulated. This paper seeks to examine some current issues faced by the economies of major countries in the Asia pacific region (Hawke, 2009).
Trade between countries such as the US or other EU countries with Asia pacific region especially China has been under economists attack due to various policies which are viewed as halting trade and economic growth as a whole. Taking china as an example, the Chinese government has had a policy of halting the currency appreciation against the dollar. Such actions are mostly followed by Chinese exports to the US being cheap whiles imports from US to china are relatively expensive. Due to this fact, the economy of china gradually falls and trade between china and the US is affected not mentioning the long run effect of imbalances in the global economy (Envall, 2010).
The Obama administration have discussed the low rate of china’s currency appreciation under the fast exports increase in China and trade overload over the past year in an effort to urge China to speed up the rate of currency appreciation in order to balance the global economic trade (Envall, 2010). With the rise in cost of importation in china, the economy and growth of economy in the whole Asia pacific region is greatly affected which could lead to other countries suffering due to hindrance of the global economy recovery.
The trade issue in the Asia Pacific Region also extends to the export materials from these countries. Clothes and electronics are the most common commodity exports from the Asia Pacific countries and a need to diversify the export material is becoming louder each day. Countries such as Vietnam and Philippines are much affected by the lack of a diversified economy though their exports income has continually improved their GDP still remains low compared to other countries (Hawke, 2009).
The issue of use of different currency has lead to some relative economic problems in terms of trade in the Asia pacific region. These issues have caused some currencies such as the Vietnam Dong and Philippine’s currency to float in the global market and thus a slow economic growth. In comparison to the EU (European Union) a common currency for this case the Euro, helps in trade affairs across borders and through this, a common free trade area is achieved which helps the economies of such countries to grow. This brings in the idea that an open economy is the fastest growing economy.
Countries in the Asia Pacific region are also faces by an issue of almost similar energy supply and demand. An example is the case of Indonesia and china whose energy supply and demands are met by petroleum resources and coal resources respectively. In this context, an energy crisis in one country would indirectly or directly lead to effects in the other country’s exports and earnings and consequently the general economy in this country is affected (Envall, 2010). Petroleum products in Indonesia are the major exports while as china will soon be a leading exporter of coal. With this in mind, an effect in one country’s energy source affecting the other will have a major impact on each country’s economy
Economic environment is supposed to be one that should facilitate sound and safe economic growth. With the rising cost of terrorism in the world and nuclear threats, economies in most Asia Pacific region countries are at risk of being victims of depressed economy or economic sanctions from other states such the US. The threat of terrorism has hindered regional integration in various corporations such as the APEC (Asia Pacific Economic Cooperation) and therefore their economic growth is affected. With this issue comes a need to establish better economic environments that are conducive for economic growth as well as regional participation in trade and other economic activities.
Through the introduction of corporations such as APEC better environments in which economies can prosper are easily created and it also helps in enabling trade between various countries that is, it helps in trade liberalization and subsequent improvement of economies in all beneficial countries (Hawke, 2009). The corporation recently held a meeting to identify ways of fostering regional security in an effort to improve regional trade and integration. Another aim of the APEC meeting was to stabilize trade flows between the regional members and in this activity, the sought to establish better trading terms and assimilate other regional countries faced by the problem of insecurity.
In other countries which are not in the Asia pacific region for instance EU and the United States, the issue of terrorism and insecurity has posed a great threat to free trade organizations and regional trade corporation as well. Countries involved with terrorism and other security threats face risks of sanctions and are not allowed to participate in trade with other regional members.
A current major economic issue facing a lot of countries in the Asia pacific region can be drawn from the political and economic stability idea. Politics in any given country usually reflect or have consequences in the economy of that country. When the political grounds of a country are characterized with rampart corruption, the economy also reflects deficient efforts and the country is bound to struggle to meet the demands of its citizens.
This is also the case in Asia pacific region in countries such as Vietnam and Korea. A stable government is also characterized by a stable economy and low risks of inflation. Korea has in most cases been involved in nuclear threats and these activities have contributed to destabilization of the Korean government and consequently a reduction in economic growth due to less economic activities with other neighboring countries in the regions such as Japan as well as economic sanctions (Hawke, 2009). This and other activities contribute to economic crisis that are associated with unstable governments.
In other cases such as in Vietnam, inefficient and incompetent governments are cited as the leading contributors to the problem of inflation. Vietnam today faces the problem of wealth distribution whereby the vast population of Vietnamese are poor while as only a small percentage is extremely rich. Under these circumstances, inflation is bound to be experienced or a low currency exchange power of the Vietnam dong. Consequently, trade and other economic activities between done by these countries are either inefficient or expensive to sustain and therefore its economy faces a risk of depression.
Also associated with the issue of instability is the lack of employment. Asian pacific region faces an issue of increase in unemployment especially countries such as India. In this context, the cost of production for various commodities increases and the profit margins are narrowed. The country is therefore not in a position to participate in trade activities beneficially with other regional countries and therefore faces an economic crisis on labor and trade provision (Envall, 2010).
The Asia pacific region is today faced by vast issues which can be summarized in the above discussion. Though the region’s majority countries are characterized by a GDP that is lower than the one in countries such as in EU region, they can boost of a rapid growing economy that is expected to overshadow some issues that have faced the region for a while such as low currency power against the dollar and Euro (Envall, 2010).