The Covid-19 pandemic is causing a deeper contraction in Asia-Pacific economies, the APEC Policy Support Unit said on Monday (06.07.2020).
New report The updated report finds that economic growth in the Asia-Pacific Economic Cooperation (APEC) region was now expected to slow by 3,7 percent in 2020, down from its initial forecast of a 2,7 percent contraction in April, bringing total output loss to a staggering $2,9 trillion.
The new projections are in line with revisions by the International Monetary Fund. (IMF) in its recently updated World Economic Outlook.
Source: IMF WEO (June 2020 update) and economic sources
"Global growth is projected to fall to 4.9 percent, compared with a 3 percent decline previously estimated by the IMF," the APEC unit said.
Its director, Dr Denis Hew, said that The prolonged duration of the pandemic had caused a worse-than-expected impact on the global economy, with some economies recently reporting a second wave of infection cases.
“Economic recovery is on the horizon, but it depends heavily on the availability of vaccines and treatments, as well as the effectiveness of the economic policies that economies are implementing to address the pandemic,” Hew said.
The updated report projects an economic recovery for the region of 5,7 percent in 2021, compared with the previous estimate of 6,3 percent.
The possible rebound depends on whether the pandemic can be contained during the second half of this year.
It also reported that APEC region growth had contracted 2.2 percent in the first quarter of this year due to travel restrictions and widespread lockdown measures that depressed domestic consumption, trade and investment activities.
"Merchandise trade posted a further contraction in the first quarter due to the combined impact of trade tensions and supply chain disruptions," it said.
Meanwhile, APEC Policy Unit researcher Rhea C. Hernando said overall merchandise trade in the region had declined significantly in both value and volume this year.
Hernando, who wrote the report, said that Temporary restrictions on food and medical supplies had further weakened trade. in the first quarter of the year.
«The value of trade in goods in the region fell by 5,8 percent for exports and 4,1 percent for imports.
“Foreign direct investment shares a similar sentiment with inflows into the APEC region declining by 3,1 percent, while new investments declined sharply by 20,4 percent in 2019,” he said.
Amid the uncertainties, the report recommended that APEC economies take decisive action.
This included stepping up efforts towards containment measures to prevent new waves of the pandemic, while maintaining fiscal and monetary stimulus measures to help alleviate the risk of people falling into poverty and businesses failing.
The report also urged member economies to invest in digital technology, including building or boosting technology infrastructure, equipping workers with digital skills, and modernizing business and governance processes.
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