As the world moves out of the shadow of the global financial crisis, Pacific Rim economies are adjusting to a new, and probably more resilient, growth model, says Alan Bollard.
The former Reserve Bank governor and Treasury Secretary views these issues from a new vantage point, heading the Asia Pacific Economic Co-operation secretariat in Singapore.
On a brief visit home this week, Bollard told the Herald that recovery from the GFC had proven more volatile and mixed than initial expectations, which were based on the experience of smaller crises.
"The Pacific Rim has been in reasonable shape. You wouldn't find a better part of the world in terms of recovery. But trade has hardly grown in the Pacific Rim over the past two years, whereas GDP has continued to grow."
That had hit the most trade-dependent economies, such as Singapore, Hong Kong and Chinese Taipei.
By contrast, Indonesia and some of the other larger Southeast Asian economies had been pulled along quite well by strong domestic demand, Bollard said.
But even the more strongly growing economies were coming to terms with growth at lower than pre-GFC trend levels.
Reflecting on what this means for Apec economies' trade, Bollard sees a transition to a model where the American consumer is not necessarily the final driver of growth in the region.
"It should lead to more resilient growth because you have a number of growth nodes." The region had seen stupendous progress in economic growth and living standards over the past 2 decades, he said.
One result was a growing middle class with a lot of economic power.
"They have better purchasing power [than their parents]. They probably save less. They have expectations of economic services provided by government that are stronger than in the past. They are more global in outlook. They are more interested in travelling."
It was not just an Asian phenomenon. Many Latin American economies were showing the same signs, Bollard said. "It's not cultural. It is primarily driven by improved economic conditions."
One consequence of the more discriminating consumer was a need to protect the integrity of brands.
"I saw the botulism scare making headlines in every major newspaper. Some of them seem to have got the facts right. Some didn't. But there was one message in there and it wasn't a good one for New Zealand. I guess we have all learned just how viral that sort of reputational damage can be."
Meanwhile, as financial markets anticipate the tapering of quantitative easing by the US Federal Reserve and more normal financial conditions such as positive real interest rates return, the flood tide of liquidity which had flowed into emerging markets has begun to ebb.
"We see capital flowing out and we see exchange rates coming down a bit. It does at least mean less pressure on property markets, stock markets and other asset markets. In a number of economies people would not necessarily see that as a bad thing.
"But I don't think these volatile flows are particularly helpful for anybody," Bollard said.
Fears that trade finance would contract, as it did in 2008-09, had not eventuated.
Many Apec economies were keen to see further deepening of their capital markets, so that they could intermediate more of the funds originating within them, he said.
Bollard took over as executive director of the Apec secretariat at the start of the year.
He was impressed to discover how much work was going on below the radar in more than 40 working groups devoted in one way or another to reducing barriers to cross-border trade and investment and to building capacity where it was needed.
In a world where global supply chains commonly cross borders many times, and where trade in services is becoming ever more sophisticated, Apec's trade facilitation role is vital.
There is also value in the opportunities Apec provides for leaders and ministers to meet, on the general principle communities work better when neighbours are not strangers.
For example people look to the Apec leaders' meeting in Bali in early October for progress on the Trans Pacific Partnership trade negotiations.
Although only half Apec's member economies are engaged in the TPP process, occasions such as the Bali summit and the ministerial meetings preceding it provide opportunities for political horse trading.
Bollard offers no view on whether the aim of a substantive deal by the end of the year is feasible. "I don't know." But he said TPP could be a game-changer.