Welcome Remarks by Minister Lim Hng Kiang at the Welcome Dinner for Singapore Summit 2015

​WELCOME ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, WELCOME DINNER FOR SINGAPORE SUMMIT 2015, FRIDAY, 18 SEPTEMBER 2015, 7.00PM, SANDS GRAND BALLROOM

Mr George Yeo, Singapore Summit Conference Chairman,

Distinguished guests,

Ladies and gentlemen,

        ​​  Welcome to the 4th Singapore Summit. I am pleased to see so many friends, business leaders, and thought leaders once again in Singapore for this Summit,and I am looking forward to the exchange of perspectives and ideas that we will have over this weekend. 

Concerns over the global economy

2        ​Many of us here had hoped that global growth would pick up pace in 2015, after experiencing a few years that had been marked by a modest and uneven recovery across economies. Two months ago however, the International Monetary Fund (IMF) trimmed its forecast for global economic growth to 3.3 per cent, from the 3.5 per cent forecast made earlier this year. If the latest forecast pans out, global growth will be the weakest since the global financial crisis in 2009.

3​        ​There are a variety of reasons for the current sentiment on the global economy. The global economic recovery remains uneven across economies – the U.S. has recovered well in 2Q2015, growing by 3.7 per cent on a quarter on quarter seasonally adjusted annualised basis; but the Eurozone economy grew by only 1.3per cent in the same period, held back in part by sluggish labour market conditions.Low commodity prices and an anticipated normalisation of U.S. interest rates has also led to increased risks of capital outflows and added pressures on currencies and asset markets.

4​        ​Perhaps the biggest concern on most people’s minds however is over China’s economy. While its 7.0 per cent year-on-year growth in 2Q2015 would have been the envy of advanced nations, there are concerns that China could experience a sharper than expected slowdown, if there is a sharp correction in the real estate market or a significant weakening of consumer and investor sentiments.Additionally, last month’s correction in China’s stock market and unexpectedloosening of its currency peg, to bring the Renminbi (RMB) more in line with the market, led to a selldown in global stock markets and heightened volatility in international currency markets. This could also affect global consumer and investor sentiments.

Asia’s growth prospects remain bright in the long term

5​        ​Notwithstanding the current challenging macroeconomic conditions, the long-term Asian growth story remains bright.

6​        ​In China, the government has already made some progress in rebalancing its economy from investment- and export-driven growth, towards consumption-driven growth. According to the World Bank, China’s consumption share of GDP has increased by 2 percentage points since 2011, to reach 51 per cent in 2014. The successful implementation of the Third Plenum reforms would also help put China on a sustainable path to strong growth.

7        ​​If we take the long view, China’s growth potential and its impact on the region become even more apparent. China is expected to overtake the U.S. to become the largest economy in the world by 2026, according to the Economist Intelligence Unit (EIU). As private consumption becomes the primary driver of demand in China, the country will also emerge as a leading source of final demand in the global economy. This presents Asian economies with growth opportunities as the regional supply chains are configured to cater to China’s huge market.

8​        ​Underscoring the immense growth opportunities that lay not only in China, but also in other parts of Asia as well, is EIU’s projection that in 2050, three of the four largest economies in the world will come from Asia. These are China, India, and Indonesia.

9        ​​Asia’s strong growth potential is not surprising, given that many countries in the region have favourable demographic trends and a fast expanding middle class. As these economies continue to develop, there will be a large demand for infrastructure investments to close infrastructure gaps. The rising Asian middle class will also aspire to higher living standards, thereby generating strong demand for consumer goods.

Regional economic integration will help realise Asia’s potential

10​        ​Regional economic integration will play an important role in unlocking Asia’s growth potential, by eliminating trade barriers, attracting more investments, and facilitating more competitive markets. Ongoing “mega” regional initiatives, such as the Trans Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), are pathways towards this goal.  

11​        ​The TPP, which currently links 12 parties from either side of the Pacific, will integrate one third of world trade, and 40 per cent of the world’s GDP –amounting to a combined GDP of US$28 trillion. As a high quality comprehensive agreement, the TPP will go beyond traditional trade issues, and tackle challenges faced by modern businesses. We are currently within striking distance to the completion of the TPP.

12​        ​At the same time, the RCEP will broaden and deepen ASEAN’s linkages with its six Free Trade Agreement (FTA) partners. It is a significant initiative, representing over 3 billion people and a third of the world’s GDP. Like the TPP, the RCEP seeks to lower trade barriers, facilitate trade, and deepen economic integration, by transforming the region into an integrated market with ASEAN at the centre. We are encouraged by the good progress made at the Ministerial Meeting in Kuala Lumpur last month.

13​        ​As a participant in both the TPP and RCEP, Singapore sees both initiatives as complementary efforts towards achieving regional integration. Asia-Pacific-wide integration promises income gains reaching USD1.9 trillion, or 1.9 per cent of world GDP by 2025. This will have a larger trade-creation effect, and result in an Asia-pacific region that is more attractive and competitive, with improved market access and connected global supply, production and value chains. This is why the architectures of both the TPP and RCEP are designed to be open and inclusive, to serve as mutually-reinforcing pathways towards the goal of an Asia-Pacific-wide FTA.

14​        ​ASEAN members have also been intensifying efforts to achieve deeper economic integration amongst themselves, through the ASEAN Economic Community, or AEC 2015. The AEC 2015 seeks to achieve the free flow of trade and investment in the region, to make ASEAN more attractive to businesses, by reducing or eliminating tariff and non-tariff barriers, and simplifying rules. This will promote economic growth in a region that is already one of the most dynamic and fastest-growing regions in the world. Despite the uncertainty in the global economic climate in recent times, ASEAN has displayed remarkable resilience and is expected to continue rapid and sustained growth, at an annual average of 5.6 per cent from 2015 to 2019. [1]

Conclusion

15​        ​Asia’s long-term prospects continue to remain bright, and efforts to integrate the region will help Asia, as well as the global economy, realise theirgrowth potential, and prosper.

16​        ​You have many interesting sessions ahead of you tomorrow, on growth opportunities, risks, and game-changing businesses. I am confident that these will be filled with fruitful and lively discourse. We are all looking forward to the keynote address later this evening by His Excellency Arun Jaitley, Minister for Finance, Corporate Affairs, and Information and Broadcasting, of India.

17​        ​Please enjoy the rest of the evening. Thank you.

[1] Source: OECD: "Economic Outlook for Southeast Asia, China and India 2015: strengthening institutional capacity"

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