APEC seeks to separate fiscal, monetary stimulus programmes

Fiscal and monetary stimulus measures need separate exit strategies and timing in order to strike a balance between supporting a nascent recovery and preventing asset bubbles, Asia-Pacific leaders said.
 
Speaking at the Asia-Pacific business leaders conference, Singapore's Prime Minister Lee Hsien Loong said a late withdrawal of monetary stimulus might stoke price increases in markets such as stocks and properties, even as Malaysian prime minister Najib Razak said policy makers must avoid prematurely ending fiscal programs until a "real" recovery is secured.

The Singapore prime minister said hard work has to be done and not just by governments but also by companies, by workers and by economies cooperating together.

"Businesses too play a part, and it is an important one, because while the governments and the World Bank and the IMF can set the pre-conditions, set the stage and create the frameworks, finally we cannot create the prosperity," he said, adding that the crisis has ended a momentum for laissez-faire, for free markets.

"So the moods now is that governments should intervene more, to moderate the excesses of laissez-faire, and to make sure that things always go right," he said.

However, he said bureaucracy and regulation could at best only create the pre-conditions for wealth creation, and channel the dynamism and the energies of the private sector along the right channels. "But we still depend on the private sector to create wealth, to have that entrepreneurial spark, to have those animal spirits, to have faith in the future, and that creative imagination and drive to do well, to do something different to change the world."

Policy makers around the world are moving towards unwind some of the emergency steps they took to counter the global recession after cutting interest rates and adding more than $2 trillion in government expenditures.