As trade tensions undermine global trade, investment and output, growth in the APEC region is expected to moderate to 3.8 per cent in 2019, down from 4.1 per cent in 2018, says a new report by the APEC Policy Support Unit.
In 2020, GDP growth for the region is projected to decelerate further, within the range of 3.5 to 3.7 per cent, the report forecasts. However, downside risks may be mitigated if trade frictions ease.
“The upside potential for growth could come from the quick and positive resolution of trade tensions - that would significantly reduce policy uncertainty,” said Dr Denis Hew, Director of the APEC Policy Support Unit.
The global economy grappled with heightened policy uncertainty in 2018, as economies issued tariffs and counter-measures. Deceleration of GDP growth ensued in parallel to the announcement of trade-restricting measures in the second half of 2017, culminating in the imposition of tariffs and counter-measures in 2018.
Today, trade restrictive measures comprise nearly 60 per cent of total trade and trade-related measures, according to the report, entitled A Delicate Balancing Act.
In contrast, for decades trade drove the expansion of the regional economy, from USD 23.5 trillion in 1990 to USD 63.6 trillion in 2017.
The declining influence of trade on the region’s growth is pivotal for APEC.
“Sustaining economic growth amid trade tensions and policy uncertainty is a delicate balancing act. But it also presents opportunities - to pursue more structural reform that encourages growth that is sustainable and inclusive,” Hew explained.
The region faces other challenges: growing income inequality, greenhouse gas emissions and encroaching climate change, and industry-disrupting technology. APEC’s approach to economic policy cooperation, however, can help members in navigating cross-border complexities and find solutions.
“APEC will need to regain the spirit of 1989 ‒ cooperative, holistic and innovative ‒ if it is to step up to the challenges of the next 30 years,” said Dr Rebecca Sta Maria, Executive Director of the APEC Secretariat.
APEC 2019 is hosted by Chile, an economy that has thrived largely due to its trade with the Asia Pacific region. In an effort to broaden opportunities, Chile has included the economic empowerment of women and internationalization of small and medium enterprises as regional priorities.
The complete APEC SOM2 and Ministers Responsible for Trade meetings schedule in Vina del Mar from 3 May to 18 May can be viewed here.
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