Structural Reforms Can Counter Slower Growth Across APEC
Singapore, 20 November 2019
Structural reforms can counter slower economic growth in the Asia-Pacific region, says a new report by the APEC Policy Support Unit.
Continued uncertainty related to trade tensions dampened investment and consumer spending in the region in the first half of 2019, resulting in a moderating of growth to 3.6 percent, according to the November 2019 edition of the APEC Regional Trends Analysis report.
In 2018, the APEC region’s economy expanded by 4.3 percent during the same period. APEC economies account for 40 percent of the world’s population and 60 percent of global GDP.
“This is a moment of opportunity,” said Dr Denis Hew, Director of the APEC Policy Support Unit. “More structural reforms can help APEC economies to strengthen their foundations with diverse sources of growth.”
While an easing of trade frictions may improve the region’s outlook for 2020, this year’s first two quarters saw growth of merchandise trade – both in volume and value – to fall flat or contract.
The slowing pace of expansion in the APEC region is expected to continue through 2020, aligned with the global economic outlook. Household spending remains a key driver of growth, but consumption is slowing along with investment and trade, which helped the regional economy to nearly triple in size in three decades.
The report, entitled Slower Growth, Bigger Challenges, outlines policy reforms that can promote economic growth. For example, economies can bolster financial inclusion by investing in and enabling digital technology.
Attention may also be directed to services trade, which has proven more resilient than merchandise trade in the last year. The digital economy can help some economies to access markets more quickly.
Policymakers can also lift barriers that prevent women from participating fully in the economy; studies have shown that more economic participation by women leads to higher growth.
“The more opportunities that people have to contribute, whether women or small businesses, the more economies thrive. Improving inclusion is both right and smart,” said Dr Rebecca Sta Maria, Executive Director of the APEC Secretariat.
The goal of more equitable growth underlies the forum’s efforts to measure progress beyond economic output. As APEC celebrates its thirtieth anniversary, policy-makers are calling for alternative means to track development and inform policy, for example by considering environmental impact assessments or access to quality goods and services.
The forum’s focus on “counting what counts” beyond GDP is expected to advance during APEC 2020, to be led by upcoming host economy Malaysia.
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