1. Slide 1 Fast-forward: the Asia-Pacific after the crisis Peter A. Petri Brandeis University and East-West Center Asia Pacific Council May 6, 2010

2. Slide 2 Most likely a “V” Real GDP growth rates IMF WEO April 2010 “WEO Apr10 groups”

3. Slide 3 Growth before and after crisis Real GDP growth rates, 2000-07 and projected 2009-15 IMF WEO April 2010 “WEO Apr10 groups”

4. Slide 4 The rebalancing challenge Rebalancing demand –Make demand sustainable (Asian consumption, investment) –Link to engines of growth (Asian trade and demand) Rebalancing supply –Expand net exports (deficit economies) –Energize non-tradable sectors (surplus economies) Magnitudes –Imbalances declined in crisis; now rising –Manageable if addressed now

5. Slide 5 Structural policies US Budget discipline Financial regulation Export renewal China Increase household income, security Capital market development Infrastructure, renewable energy Currency flexibility Japan Deregulated services Energy and conservation technology Services for ageing populations

6. Slide 6 When will China pass the US? Current dollar GDP projection based on prior 5-year growth rate Calculations based on IMF WEO April 2010 “catchup graph”

7. Slide 7 Rebalancing US exports US exports 2009US export growth, 2009-14 Calculations based on US Department of Commerce trade (5/2/2010) and IMF WEO GDP data (4/2010) “WEO apr10 groups”

8. Slide 8 US strategic imperative Priorities –Engage emerging economies (Asia) –Facilitate domestic adjustment (exports) –Manage multi-layered architecture (regional FTAs) We get it –“We have to lead, and our engagement must extend to governments, business, and peoples across the Pacific.” (Obama) –“The United States is back in Asia… back to stay.” (Clinton) –“We want to be in the game in Asia.” (Geithner)

9. Slide 9 Crucial 18 months APEC: Japan 2010, US 2011 US legislative window: early 2011 Three dreams –KORUS –Trans-Pacific Partnership –A fruitful Hawaiian APEC Investment: investment principles Environment: trade and technology transfer Demographics: future capital, people flows Inclusion: spotlight on women

10. Slide 10 APEC timeline Japan –June 2010: SOM2, trade, energy –September 2010: SOM3 –November 2010: Leaders’ Meeting (Yokohama) US –December 2010: informal SOM –Mid 2011: SOM2, trade, energy –November 2011: Leaders’ Meeting (Honolulu)