President of Russia Dmitry Medvedev: Ladies and gentlemen,
I would like first of all to thank you for the opportunity to speak here at the APEC CEO Summit and, naturally, to share my impressions of what we have been able to do recently to overcome the international financial crisis, our current situation, and the present condition of Russia's economy. Of course, we also want to exchange ideas about what we still need to do to climb out of recession.
It has become commonplace to assert that in recent times we are observing what we say are certain signs of recovery from recession, some evidence of stabilisation. Macroeconomic indicators show that economic activity is increasing, the situation in the financial sector is improving, and this rightly gives us cause for cautious optimism. But talk about the full recovery of the global economy is certainly premature – in all likelihood, this is simply a period of adaptation to new conditions. And what next? Speaking very frankly, despite the huge number of predictions, detailed analyses and expert opinions, no one really knows.
The rapid drop in the global gross domestic product has been halted, primarily due to anti-crisis programmes undertaken in most countries. Fiscal and monetary measures underlie all of these programmes. However, for understandable reasons they are not designed for prolonged use. These programmes have already led to budget deficits for many countries, including our country, and increased public debt in most of the world's leading economies. We talked about this in detail at recent meetings, including at the G20 summit recently held in Pittsburgh.
We all agreed that anti-crisis programmes should be dismantled, but only when the recovery of the global economy becomes more assured. It remains to determine when that will be and that is probably the most difficult: this will be a choice that each country makes individually, the choice of each country’s leadership. But this should be done on the basis of agreed exit strategy principles and with insurance against the risks of premature or, conversely, late action. So that we can avoid increasing inflationary pressures and maintain the stability of national budgets, something that is very, very necessary for all of us today.
The current crisis has clearly demonstrated what we have read in books, in various publications, and heard during academic seminars. The crisis has demonstrated the total interdependence of domestic economies, to an extent much greater than anyone expected.
In this situation the coordination of national macroeconomic policies gains particular importance, along with the supervision and monitoring of the financial systems of individual countries and the global economy as a whole. And there must be a competent and impartial analysis of the situation.
In a crisis, every country is entitled to receive as much information as possible and assess not only the success of their actions – that is self-evident – but the actions of their partners, because often our own measures can be neutralised by mistakes in other countries’ economic policies. Everyone has recognized this and, incidentally, we took the relevant decisions in Pittsburgh. I believe that this decision is going in the right direction.
Of course, standards and criteria for such assessments cannot be imposed on anyone. They need to be elaborated during transparent discussions among all participants in the global economy and implemented by international organisations which enjoy universal trust.
In Pittsburgh we achieved a long-awaited consensus on reforming international financial organisations. It was not easy but at least it had a positive outcome in recent months. And the decision to reallocate quotas in the IMF and World Bank was made for the benefit of developing economies and emerging markets, and we believe that this is both correct and necessary, even if it is only done now.
An important condition for a successful recovery from the crisis is that financial markets return to the normal, standard principles which govern their operation. Even though this is not all that simple.
We must ensure the transparency and efficiency of general and compulsory rules for the regulation and implementation of financial policies. It is clear that improving such mechanisms requires long and painstaking work that takes into account national characteristics of financial markets, and the specificities of the size, structure and development level of financial systems in developed and developing markets. All our actions in this respect must be fully-developed, but at the same time prudent, well-thought through, and measured. We often talk about the need for harmonising financial rules – something that really is necessary. But standardisation should be rational and harmonious, because simply large-scale standardisation, if not based on consensus and on common criteria, may have the opposite effect and even enhance the disintegration of financial systems in different countries.
We also have our own plans to improve Russia's financial system. We have some quite serious plans for our financial system and expect that post-crisis Russia will have a strong financial system and, ultimately, become one of the best financial centres in the world. In the coming years such work must be intensified, even though as a matter of fact we have not interrupted it.
The emerging pattern of growth should ensure the global economy's equitable and sustainable development, and help eliminate some of the distortions adversely affecting development during this crisis. We must coordinate our actions not only in terms of fiscal policy – we have more or less learned how to do that – but also in dealing with the problems of social security, accessibility to and quality of education, and labour mobility. The crisis has created enormous problems in this regard and the International Labour Organisation (ILO) has an important role to play in this process. Incidentally, Russia supports the ILO's recently adopted Global Jobs Pact. We have done a lot ourselves to reduce tensions in our labour market. In some aspects this has worked well: we've succeeded in stabilising the situation and unemployment has levelled off, but we know that an important feature of such a crisis is that at the end of its financial phase social tensions created by unemployment often continue unchecked. So we must evaluate these processes very carefully by studying them in both national economies and the global economy. We regard social support as a long-term investment, an investment in human capital. It is certainly one of the key factors in economic stability and I think that APEC offers us great potential for cooperation in this field.
The most important factor in crisis recovery is the restoration of international trade. At last year's APEC summit in Lima during the G20 we discussed at length that trade barriers are a bad idea. We must reaffirm those commitments here in Singapore and do all we can to ensure that our countries refrain from protectionism in all its forms. I want to stress this point about the various forms of protectionism, because the issue goes beyond simple trade protectionism.
Trade is a powerful stimulus for economic growth, but trade is also an important way of resolving social problems. It is a crucial aide in combating the most severe problem that plagues many countries, namely poverty.
Developing countries' access to international markets will enable them to continue engaging in progressive development. For this reason we need to remove all internal trade barriers. These are our common goals: to improve commercial and financial infrastructure, the principles and standards of regulation, and the work of customs services. Russia is well aware of protectionism’s dangers, especially in times of crisis. So I would like to particularly stress that specific and quite small-scale protective measures that we have taken during this period are short-term in nature and will be removed when they have run their course.
I am not going to embark on a series of platitudes, but the fact is that this crisis has had a tremendous effect on all of us, a tremendous effect on Russia. But thanks to anti-crisis measures and the policies adopted last year, we have been able to stabilise the situation. We are able to monitor the labour market as I just mentioned and also ensure the stability of the financial system. Of course the cost has been substantial: the end of last year and the beginning of this year were very difficult. But the situation has improved because of the arrangements made by other countries, primarily through the provision of additional liquidity to the banking system, and of course because of specific measures designed to give direct support to the real sector of the economy.
Dear Colleagues,
We consider the economic crisis to be – and I hope this is true for all of us – another sign of the need for structural adjustment, systemic economic restructuring, including of course restructuring Russia's economy. We want our economy to become much less dependent on raw materials. We want it to be the knowledge-based economy that we are always talking about. That is what I said two days ago in the Presidential Address to our Parliament.
We would like Russia's economy to be far more dependent on the latest technologies, innovative products and modern IT services than it is today.
Clearly, overcoming the negative effects of the crisis and achieving sustainable economic growth are impossible without broad international cooperation between national governments, the regions, interested businesses, and international financial organisations. This is precisely what we are going to be talking about today at a meeting of heads of state and governments participating in the APEC forum.
I am sure that decisions taken here will make a constructive contribution to ensuring the balanced, sustainable, comprehensive and safe growth of our countries' economies.
Of course the crisis marks a very difficult phase for the global economy. It has had a profound effect on every country, but we have also learned a lot from it. And the fact that we have made significant progress over the past year, that we have learned to listen to each other better and, most importantly in my view, the fact that we have shown ourselves capable of making concerted efforts – are all things I find encouraging.
I hope that we can achieve new results here in Singapore. Thank you.