The Asian region had been largely insulated from the Global Financial Crisis (GFC) and would aggressively outperform other global economies in the medium term, financial experts at the inaugural In The Zone conference at The University of Western Australia said today.
Dr Philip Lowe, Assistant Governor (Economic) of the Reserve Bank of Australia, described the GFC as "a misnomer", with the crisis not occurring in all financial systems around the globe.
"Rather, it has been a crisis in the financial systems of many of the advanced countries of the North Atlantic. To be sure, this crisis has had very large ramifications for the global economy - including the economies of Asia - but we have not seen a crisis in the financial systems of Asia," he said. "There have not been collapses of large financial institutions in Asia and banks have not needed to be rescued by governments."
Dr Lowe said a key reason for the Asian resilience was the integration of financial systems into global processes. A lesser reliance on financial markets, as opposed to institutions, and the consistent role of central banks in mediating between savers and borrowers, and hence growing credit to the private sector, were other reasons for the insulation of the Asian financial system.
Dr Lowe said Australia's financial system reflected an overall goal of a strong and resilient financial system able to support the ongoing expansion of the real economy. "Over recent times, both Australia and the countries of Asia had more success here than have many others," he said.
Mr Alex Thursby, Chief Executive Officer, ANZ Asia Pacific, Europe and America, said the GFC had provided Australian banks such as ANZ with huge opportunities, due to the strong fundamentals of the Australian banking system.
He said a number of significant changes were underway in Asian countries, including substantial economic growth, progressive democratisation and improvements in legal systems. "Asia's role is changing - it wants a bigger role in the global economy," Mr Thursby said.
In the future, Asia would be aided by its balanced financial system, strong entrepreneurial and private sector economies, well-capitalised multi-nationals and strong saving ratios and foreign currency reserves, he said.
The future strength in Asia would assist should Australia's traditional sources of raising offshore capital - the US and Europe - become harder.
Dr David Gruen, Executive Director Macroeconomic Group, the Treasury of Australia, said global imbalances needed to be reduced, with a huge flow of funds from Asia to the US evident.
In China, savings are exceeding investment to the point that the country has recorded current account surpluses of more than 10 percent in recent years.
Dr Gruen said that in the US, sizeable current account deficits in recent years were due to low levels of savings and the consumption of 70 percent of output.
He said that by comparison, Australia's current account deficits were not because of low savings, but due to large levels of investment. Conservative fiscal policy and a compulsory superannuation savings scheme were contributors to the fact that Australia's consumption is not a rising share of GDP, Dr Gruen said.
IN THE ZONE is a major public policy conference initiated by The University of Western Australia positioning Western Australia as a thought leader within the time zone it shares with 60 per cent of the world's population and the nations which promise the greatest economic growth for the 21st century.
2009 marks the inaugural IN THE ZONE Conference. This will become a biennial event and a strategic meeting point for the Australian and wider regional community to engage in dialogue about the zone we inhabit and to deepen the policy, trade and investment relationships.
Information about In the Zone, including the conference program: http://www.zone.uwa.edu.au
NB: MEDIA REPRESENTATIVES MUST REGISTER TO COVER THE CONFERENCE. GO TO: http://www.zone.uwa.edu.au/news/media_registration