But the dramatic and ongoing changes give investors hope and confidence that these problems will in time be overcome, making them feel that they cannot afford not to be in China. A second reason for Southeast Asia’s under-performance is the regional political and security situation. The Asian Crisis precipitated major social and political changes in many countries, deterring MNCs from committing to new investments in an uncertain climate. These overriding political concerns also distracted the governments from tackling urgent economic problems and implementing painful structural reforms to remedy weaknesses uncovered by the crisis. In contrast, South Korea’s aggressive post-crisis restructuring of its corporate sector has spurred a more rapid recovery. Most crucially, the Asian Crisis brought down the Suharto Government in Indonesia, and launched Indonesia on a new and uncharted path. For thirty years, a stable Indonesia, with a strong government focused on economic development, had provided a critical basis for confidence and peaceful cooperation in the whole of Southeast Asia. Suharto’s fall changed this. The subsequent Indonesian government abandoned Suharto’s longstanding policy of restraining political Islam, thus opening Pandora’s box. Islamic groups, including the militant ones, now wield considerable influence in Indonesia’s body politic. Indonesia’s political and social landscape has altered drastically and permanently, affecting the whole region. More recently, Southeast Asia has faced security problems from extremist Islamic terrorist groups linked to Al Qaeda. After September 11, such groups were discovered in Malaysia, the Philippines, Singapore and Indonesia.
William C Dudley: The US economic outlook and the implications for monetary policy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the ABNY (Association for a Better New York) Breakfast, New York City, 5 December 2016. * * * Jason Bram, Andrew Haughwout, Joseph Tracy and Luis Uranga assisted in preparing these remarks. It is a great pleasure to be here and have the opportunity to talk about the U.S. economic outlook. I want to thank the Association for a Better New York (ABNY) for sponsoring today’s event. This is an excellent venue to speak about what we can do to improve our country’s economic performance. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. The U.S. economy—supported by solid gains in household spending—has expanded at a moderate rate in 2016. Job gains have been sturdy, and we have seen some firming in wage growth as the labor market has continued to tighten. Moreover, as the effects of earlier declines in energy prices have dissipated, the overall inflation rate has begun to move up closer to our 2 percent objective. As a consequence, economic conditions are not far from the Federal Reserve’s dual mandate of maximum sustainable employment and price stability. And, I expect that we will make further progress toward these goals in 2017.