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Global
Summit of Women 2008
MEGATRENDS AFFECTING THE WORLD'S ECONOMIES
2008 Global Summit of Women
Melia Hotel – Hanoi, Vietnam
Friday, June 6, 2008- 9:00 – 10:30 am
Prepared
Remarks for Treasurer Anna Escobedo Cabral
U.S.
Department of the Treasury
Thank you for the generous introduction. I am pleased to be at the 18th Global
Summit of Women -- the foremost international forum regarding women's issues. I
am proud to be in such distinguished company, including female government
ministers, business executives, NGO leaders, entrepreneurs, and professionals
from more than 60 countries. I have no doubt this will be a successful summit,
which will expand opportunity and accelerate women's economic progress
worldwide.
I would like to express special thanks to the talented
Summit President Irene Natividad, as well as to Georgette Tan (VP
Communications, MasterCard) and Xiaoyah Zhao (Senior VP, GfK Roper) for their
insightful presentations.
Also, I would like to extend a special note of gratitude to
the government and the people of Vietnam for their extraordinary effort in
serving as host to this year's summit and for their friendliness and gracious
hospitality. A Vietnamese proverb says, “Never forget benefits done you,
regardless how small.” Certainly, I shall not forget the kindness – both large
and small - shown to me this week.
U.S. President Bush, Secretary of State Rice, and Treasury Secretary Paulson
visited Hanoi in late 2006 for the Asia-Pacific Economic Cooperation Summit.
They came with many messages, but with several themes in common – praise for the
people of Vietnam for their tremendous economic growth in the past decades and
great support for the people and the economies of Asia. Today, I hope to
reaffirm that message.
I will be addressing the topic of "Megatrends Affecting the World's
Economies." Although this topic is a broad one, I have narrowed my remarks to
demographic trends, such as increased population and aging in Asia and how these
trends affect women and the economy. Also, I will discuss the trend of females
successfully using microfinance to decrease poverty, and an issue that I hope is
quickly becoming a global trend, financial literacy. But first, I will begin
with a broad discussion of the economy.
Asia is the fastest growing economy and one of the most
dynamic regions in the world. It is of central importance to the global
economy, has attracted the attention of investors and entrepreneurs from around
the world, and continues to grow. From India to Japan and from China to
Singapore, each country is on its own economic path to the future, but each is
inextricably linked. Globally, each of us shares the benefits and
responsibilities of expanding economic prosperity.
Over the past year, critical developments in the global markets have led to
mounting concerns about whether Asia can continue its impressive economic
performance. While the recent market turmoil has had limited direct effect on
most Asian economies, the slowdown in the United States and Europe has begun to
impact demand for exports from Asia, reinforcing the importance of Asian
economies shifting to a model of growth that relies more on domestic demand and
less on exports.
As you are aware, the United States has been experiencing some financial market
turmoil since mid-2007 which has had global implications. A variety of factors
led up to the problem – easy credit conditions, a decline in mortgage and other
credit lending standards, increasingly complex financial instruments and
structures, excessive leverage in our financial system, and investor and credit
ratings agency issues.
The President, U.S. Treasury Secretary Paulson and other leading policymakers in
the United States responded swiftly to help stabilize markets and reduce the
impact on the economy, while at the same time, avoiding regulations and actions
that would stifle innovation or hinder self-correction.
The U.S. implemented quick policies such as urging banks to recognize and report
losses and raise additional capital, developing initiatives to help keep people
in their homes, and enacting a $150 billion economic stimulus package to support
consumer and business spending. Also, the US Federal Reserve has taken focused
actions to protect the financial system. Already, we are beginning to see
modest yet positive effects of these actions. We continue to work on developing
longer-term solutions to strengthen financial markets and fix the weaknesses
that contributed to the turmoil in global financial markets.
It is also clear that the response must be both a domestic
and an international one. So, Treasury is working closely with counterparts in
the G7 and other major economies around the world to address market instability.
The Financial Stability Forum, which brings together the supervisors, central
banks, and finance ministers of major financial centers, has been critical to
this effort. The FSF has released a number of recommendations and
implementation has begun.
U.S. demand for imports has slowed over the past year, affecting exporters in a
variety of nations here in Asia and across the globe. However, in the midst of
a US, and to a lesser extent, European slowdown, Asia has faired relatively
well. Economic growth in Asia remains somewhat buoyant and appears to be a
brighter spot in terms of growth opportunities.
In recent decades, Asia has enjoyed increased entrepreneurial opportunities,
improved access to capital markets, increased global trade, and increased
consumer spending power. Growth throughout Asia has led to an accumulation in
wealth, high savings, and the growth of a strong middle class very quickly.
Hundreds of millions have joined, and continue to join, the middle class in the
Asia-Pacific. This shift to growth driven by domestic demand will help Asia
enjoy sustained and resilient growth, while also increasing the living standards
of people throughout the region.
Perhaps one of the greatest examples of economic growth in Asia is here in
Vietnam. Since 1975, Vietnam has been transformed. It is now one of Asia's
fastest-developing countries, with annual growth averaging 7.5 percent over the
past decade. It has made impressive progress in reducing poverty. It is a
rising diplomatic power. And, it has escaped deep poverty by embracing free
trade.
In fact, over the past two decades, many Asian countries have made tremendous
progress in the fight against poverty. As home to two-thirds of the world's
poor, poverty remains one of the most pressing issues in Asia today, and it
remains an issue of great importance to women, who are often disproportionately
affected. Private sector development is helping, especially better financial
inclusion and microfinance.
Women in Asia have long known their strength in managing
household assets. In Japan, China, Vietnam, and many other Asian countries,
women are often the primary caretakers of money matters in the family. So it
comes as no surprise that women achieve great success when given access to
resources through microfinance and microcredit.
There is overwhelming evidence from developing regions of the world that women’s
investments help families, help the economy, and reduce poverty in the
developing world.
Recently, The Washington Post ran a fascinating story about women being
key in the reconstruction of Rwanda's economy. That story also cited that in
Bangladesh, the Grameen Bank, the best-known of all micro-credit organizations,
has focused its microloans on women and had success rates far higher for female
than for male borrowers.
It goes on to mention that, "In India's great economic transformation of the
past 15 years, states that have the highest percentage of women in the labor
force have grown the fastest as well as had the largest reductions in poverty,
according to the World Bank."
Microloan programs across the developing world have shown similar results.
An interesting demographic trend in Asia with economic implications is rapid
population growth. Over the past half-century, this population explosion
captured the attention of the scholars and policymakers around the globe.
Today, however, population growth has slowed and the demographic boom is
essentially over. But the factors that contributed to the boom – better
healthcare, and longer lifespans – remain for both women and men.
The results of this rapid population growth, combined with economic growth, have
given the region much greater role in global economic affairs. As of mid-2000,
roughly three-fifths of the world's population resided in Asia. But as the
population in this region ages, Asia will face new challenges.
Age patterns vary enormously in Asia. In places like Afghanistan, Pakistan,
Laos, and Cambodia, the median age in the year 2000 was below twenty years old.
Vietnam, too, has a relatively young population. However, in the coming years,
most population centers in Asia are expected to age appreciably.
In many countries, population aging is already well underway. Thailand,
Singapore, South Korea, and South India are beginning to see these increases.
Japan, already considered one of the "grayest" countries on earth, is one of
the most extreme cases.
While aging will pose serious challenges to the region's
economies, it will also create new economic opportunities over the decades
ahead, especially in Japan and China. With more and more people of retirement
age, there will be less working-age people to support growth and fund rising
public pension expenditures. Countries with stronger national pension systems
in place and strong public health care sectors will be better equipped to handle
aging populations in the decades ahead. In many economies, fewer traditional
workers will be in the workforce, and more nontraditional wage-earners,
including more women, will have to play an even greater role in the workforces
throughout Asia in order to support growth.
Also, families will bear an increasing financial burden of taking care of older
individuals. Caring for aging family members, educating their children, and
saving for their own retirement will create an increasing financial burden for
women in Asia. For women, knowing how to save and invest wisely will become
even more important. That's where financial literacy comes in.
Financial Literacy – knowing how to save, plan for retirement, understanding
credit, and understanding the importance of using banks and financial
institutions – is a need we all share.
As Treasurer, this is an issue that I often promote in the United States and
more recently, abroad. I believe that the best approach to complex financial
issues is prevention. If we figure out how to help families before they get
into trouble – maybe by taking simple steps such as making a daily budget, or
educating young people about savings – we can improve lives.
Further, it is in important to ensure that people become banked use the banking
system and that those banks serve not only the wealthy, but the middle-class and
those at the other end of the spectrum. It is important that people have
insurance. It is important that as the retirement system continues to change
that people understand their investment decisions. And, it is important that no
matter what financial system we have, that people have access to, and understand
how to use that system.
We know that a country's low savings rate and high debt burden are drags on its
economic growth. We see this happening in many parts of the world. In many
countries in Asia, it is not low saving, but rather inefficient saving, that
presents the biggest challenge. As retirement and education costs increase, it
becomes more and more important that households have access to more and better
investment options, so that they can meet their future financial needs while
also being able to consume more now. By educating people about these issues, we
can make a positive impact on the world economy.
International financial literacy efforts are on the rise.
Recently, the Department of the Treasury had its first conference on this issue
with some of the top world leaders in the field. I hope this trend is one that
continues to grow and flourish.
I've often heard, “When in doubt, predict that the present trend will continue.”
If this is true, it would be a generally good sign for Asia, with its
increasingly strong economies and bright future.
It is also good news for women, who are leading the charge
on so many vital issues – eradicating poverty, ensuring quality education for
our young people, protecting the environment, and creating better lives for
their families through control of family budgets. I am proud to be here today
with all of you gifted and wonderful women who are doing so much to better the
lives of people in your respective countries.
In our globally dependent world, it is important that we
share best practices and use that knowledge to ensure greater prosperity for us
all. I know I have learned a great deal already that I will take home with me.
Let’s make continuing to share ideas, learn, and help one another a trend we
continue for years to come.
Thank you. I’d be happy to take any questions you may
have.
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