Danial Norjidi
Income levels have not recovered to pre-pandemic levels in most Asia Pacific Economic Cooperation (APEC) economies, and inequality has widened, hitting the most vulnerable populations the hardest, according to a new report from the APEC Policy Support Unit (PSU).
The May 2023 issue of the APEC Regional Trends Analysis was launched in Detroit, the United States, on the eve of the APEC Ministers Responsible for Trade Meeting.
Among the findings of the new report is that, following a 2.6-per-cent moderation in 2022, economic growth in the APEC region is expected to increase to 3.1 per cent in 2023, before slowing down to 2.8 per cent in 2024.
The study highlighted that downside risks continue to be significant as APEC and the world grapple with stubborn inflation, high debt, financial sector strains and geo-economic fragmentation.
It added that decelerating trade and rising inequality, exacerbated by the pandemic, add to the challenges.
“The role of regional cooperation is more important than ever to encourage inclusive dialogue and concerted efforts to achieve growth and inflation objectives, mitigate growing inequality, and implement structural reforms that promote human capital development and improve product, labour and financial markets,” the report stated.
The findings of the report are detailed in a press statement, which noted that “the findings and analysis in the report will guide ministers’ discussion and support informed decision-making to achieve the APEC vision of an open, dynamic, resilient and peaceful Asia-Pacific community”.
Director of the PSU Carlos Kuriyama in a statement, said, “Higher living costs hinder our ability to drive towards steady economic recovery post-pandemic.
“We see narrowing fiscal space and surging debts following the massive stimulus measures taken to preserve lives and livelihoods during COVID-19,” added the director. Among the report’s findings is that general government gross debt reached the highest level in 2022, surging to 112 per cent of gross domestic product (GDP) for advanced economies, while it reached 65 per cent of GDP for the APEC region.
The report stated that supply and demand disruptions due to the compounded effect of geopolitical issues have put pressure on prices. The inflation rate in APEC reached 5.9 per cent in 2022, up from 2.9 per cent in 2021. It is projected to moderate to 4.4 per cent this year.
PSU senior researcher Rhea C Hernando in a statement, said, “Stubborn inflation aggravates income inequality, and while the majority of APEC economies have increased their interest rates to bring down inflation, the announcement by oil exporting economies to reduce oil production is fueling inflation concerns.”
Meanwhile, the report also found that trade performance decreased in 2022 due to weak global demand.
The volume of APEC’s merchandise exports and imports declined to 1.1 per cent and 1.2 per cent respectively, compared to 2021, when they were at 10.6 per cent and 11 per cent, respectively.
On this, Hernando said, “As the momentum of the pandemic-related recovery faded for trade, it is likely that merchandise trade volume will post low growth rates as well this year.
“An area of concern for us is the accumulation of trade-restrictive measures in place, especially regarding export restrictions and bans,” she added. “On top of that, we are seeing an upward trend in the number of trade remedies in force, such as anti-dumping measures and countervailing duties.
“As the momentum of the pandemic-related recovery faded for trade, it is likely that merchandise trade volume will post low growth rates as well this year,” Hernando said.
“An area of concern for us is the accumulation of trade-restrictive measures in place, especially regarding export restrictions and bans,” she added. “On top of that, we are seeing an upward trend in the number of trade remedies in force, such as anti-dumping measures and countervailing duties.”
The statement proceeds to share that, on a positive note, the easing of cross-border travel restrictions has buoyed trade in commercial services, with travel services driving the largest gains followed by transport services and goods-related services. It stated that the total export and import of commercial services trade in APEC grew by 15 per cent and 17.4 per cent respectively for the period of January to September 2022.
“One of the many reasons why APEC was established in 1989 was to lift people out of poverty and increase living standards,” said Kuriyama. “We are now faced with the fact that living standards have declined due to the pandemic with significant jobs and income losses.
“Our main task should focus on how to ensure that we don’t fall back on our progress and that the future of globalisation takes into account equity and equality, leaving no one behind,” he continued.
“We need to strengthen our regional cooperation to encourage inclusive dialogue and concerted efforts to achieve our growth objectives,” Kuriyama added. “Ensuring trade remains open is one thing, but to close educational, skills and digital gaps and open up more opportunities for our people is an essential part of the recovery.”
