Asia leading world out of downturn

October 14, 2009
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, SEOUL, Oct 14 – Former US president George W. Bush praised Asian economies Wednesday for leading the global economy out of its slump, while warning against a rise in trade protectionism.

"One thing I am certain of is that the Asian economies are leading the world out of the economic duress. That\’s an amazing statement to make," Bush said in a keynote speech to the World Knowledge Forum in Seoul.

China, South Korea, Singapore, Hong Kong, Taiwan, Japan and Thailand were performing well thanks to clever stimulus policies, he said.

"The Asian economies are going to be a powerful engine for growth for the future," Bush said. "I\’m optimistic that things are getting better."

But he cautioned against a rise in protectionism.

"In times of economic difficulties… people tend to want to throw up walls and barriers to trade. I\’m deeply concerned about protectionism," he said.

"I believe strongly that the best way to not only encourage growth but deal with global poverty is free trade."

Bush repeated his support for US free trade accords with South Korea and Panama, which were both signed under his leadership but have yet to be ratified by Congress.

And the former US leader said his nation should stay engaged in Asia.

"Bilateral relations with countries like China, Japan and the Republic of Korea (South Korea) are central for US security," Bush said.

"I believe that bilateral relations will enable the United States to continue to play an active role in the Far East. I believe in US involvement in the Far East."

But Princeton University academic Paul Krugman, winner of last year\’s Nobel Prize for economics, cautioned that the world economy has yet to fully recover.

He said it was too soon for South Korea to claim a rapid recovery, adding that the driving factor — a bounce in world trade — may not be sustained.

Krugman also discussed the roles that Asia\’s two largest economies, Japan and China, can play in the future global economy.

"Japan\’s role in the world economy is probably similar to the role it plays now as a large, wealthy, advanced country which is probably a natural exporter of capital because it has a mature and shrinking working-age population," he said.

"China needs a transformation to a growth strategy based upon domestic demand, particularly consumer demand," Krugman said.

Beijing, he said, could ease the adjustment and also benefit its people by strengthening its social safety net, especially on health care.

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