June 6, 2008
hp-1012

Treasurer Anna Escobedo Cabral Remarks at
Global Summit of Women in Vietnam

Hanoi, Vietnam - 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.

INTRODUCTION

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.

U.S. AND GLOBAL ECONOMY

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.

ASIA ECONOMY

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.

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.

POPULATION GROWTH IN ASIA

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.

AGING POPULATION

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

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.

CONCLUSION

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.