23 May 2024

Next year, economic growth in the APEC region is forecast to shrink to 4.9%, from the estimated growth of 6% this year, in anticipation of the unwinding of fiscal and monetary support measures, according to a newly published report on economic trends in the Asia-Pacific.        

The Asia-Pacific regional economy expanded by 8% during the first half of 2021, following a 3.7% contraction in the first half of 2020. Growth among member economies, however, continues to diverge and uncertainties remain substantial, according to the latest APEC Regional Trends Analysis (ARTA).

Growth in the volume and value of merchandise trade grew by double-digits in the first half of this year, thanks to the combined effect of a low comparison point, following a substantial economic contraction a year ago, and a rebound in economic activity.

Trade in COVID-19-associated goods, such as pharmaceuticals, telecommunications equipment, and computers, continued to be strong.

New Zealand on Monday began hosting the final events of its APEC chairmanship, which will be wrapped up later in the week with the virtual leaders’ meeting on 12th and 13th November 2021.

Thailand will occupy the APEC chair, beginning next year, under the theme of “Open, Connect, Balance”. The chair hopes to hold in-person summits late next year.

The analysis also saw a significant decline in green-field investments in the APEC region, plunging to the lowest level in almost 20 years. This is particularly concerning given the crucial role they play in boosting infrastructure development and productivity, as well as improving domestic technology and skills.

Another concerning development is rising inflation. The region recorded a higher inflation rate, of 2.6% in the first nine months of 2021, after averaging 1.5% in 2020. The analysis points out the risk of an upward trend in inflation to economic recovery if left unaddressed.

“APEC, along with the global economy, is in uncharted territory, where recovery is underway even amid an ongoing pandemic,” said Dr. Denis Hew, Director of the APEC Policy Support Unit, which produced the report. “There are many hard-earned lessons from the pandemic, central to which is that economic, trade and health policies are intertwined – and that good policies matter.”

“APEC economies should also think ahead toward facilitating a gradual and steady economic reopening, to revive viable sectors such as travel and tourism, reinvigorate manufacturing industries and herald the emergence of new jobs, markets and businesses that could prove more sustainable as well as profitable,” he added.

The report also addressed the existential threat of climate change for the region and humanity as a whole, as it will affect APEC economies’ financial systems, supply chains and consumer behaviour.