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Asia economy at risk, Fed official says

By Kristen Consillio

LAST UPDATED: 06:28 a.m. HST, Nov 10, 2011

East-West Center President Charles Morrison, right, introduced keynote speaker Haruhiko Kuroda, president of the Asian Development Bank, to a luncheon audience Wednesday at the Asia-Pacific Business Symposium at the Marriott Waikiki Beach Resort & Spa. "The most important sources of growth is the private sector," Kuroda said.

Asia's economy has improved, but continued sluggishness in the U.S. labor market as well as Europe's financial woes threaten recovery — which could mean serious implications for Hawaii tourism.

Mark Spiegel, an official at the Federal Reserve Bank of San Francisco, spoke Wednesday about the ramifications of the European debt crisis and slow growth in the U.S. on Asia's recovery before about 100 attendees at the Asia-Pacific Business Symposium at the Marriott Waikiki Beach Resort & Spa. The two-day forum is the first of its kind designed to connect local and foreign businesses to discuss trade, sustainability and public-private partnerships during the Asia-Pacific Economic Cooperation summit.

"The United States and Europe pose specific risks for Asia," which is heavily dependent on trade from both countries, said Spiegel, vice president of international research and director of the Center for Pacific Basin Studies at the federal bank. "We're expecting slower growth in 2012 for a lot of Asian countries than we had this year. This is surprising coming off a very deep global recession. There does seem to be some headwinds associated with declines in demand, most notably from Europe but also from weaker growth in the U.S."

Haruhiko Kuroda, president of Asian Development Bank and the keynote speaker at Wednesday's luncheon, said, "It's clear we all face serious challenges."

"The most important sources of growth is the private sector," Kuroda said.

The trade-reliant Asian markets that have been sustaining Hawaii's growth likely would fall off if Asian trade demand decreased further and "maybe they won't be making quite as many trips to Hawaii," said Carl Bonham, an economist with the University of Hawaii Economic Research Organization, who attended the forum.

"The biggest risk we face right now is Europe, which is almost certainly in a recession right now," he said. "As (Europe's) economy slows down and they stop buying things from Asia, the Asian economy's going to slow down. To bring that closer to home, the No. 1 source of visitor growth over the last year has been … non-Japanese Asian markets. It's all connected."

Spiegel's presentation echoed concerns in a UHERO report released Friday, which forecast modest growth — 1.7 percent this year and 2.1 percent in 2012 — in state gross domestic product, but a rather "gloomy external environment" that will create "headwinds" for the local economy.

Nationally, Spiegel noted that the joblessness "may have permanent detrimental impacts on the U.S. economy" as people become less employable as a result of long spans of unemployment, he said.

Because of the employment situation, consumer confidence is low and therefore a recovery might have to be led by business spending, not consumer spending, he added.

"You need the businesses to create the jobs and do the trade in order for everything to pick up," said Warren Luke, chairman of Pacific Basin Economic Council and head of Hawaii National Bank, who organized the symposium. "It's a world economy so what happens in one country affects all countries."

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Anonymous wrote:
Too much focus on tourism when the most significant benefit to our local economy would be greater self sufficiency in energy and food. We are missing the forest for the trees. Short term dominating long term.
on November 10,2011 | 03:19AM
JPM wrote:
With so many unemployed Americans it is impossible to buy the stuff they make. At one point in time we thought we could outsource our jobs and survive on a "service industry". Not sure who made that decision, but they should be considered traitors. Businesses aren't going to hire people to service people that don't have money. People get money by going to work, or stealing it by taxing someone and redistributing it. We needed those jobs to continue that philosophy. We outsourced the jobs to the countries complaining. What do they want us to do? Sell them the goods they made when they come here? Allow them to manipulate their economy, abuse workers and the environment, give them preference in our Universities. We already do that. So what do they want? More of our jobs for tourist dollars? Don’t think so, and Europe followed a similar plan so don't expect help from them. Unless you can buy our politicians--oh wait this nightmare might just happen. Would you like sugar with your tea?
on November 10,2011 | 04:32AM
HD36 wrote:
We have too many government workers. It takes six private workers to support one government worker on average. see Greece and Italy.
on November 10,2011 | 04:38PM
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