The economy of the APEC region is expected to maintain its steady growth in 2018, says a newly published report on economic trends in the Asia-Pacific.
According to the latest APEC Regional Trends Analysis (ARTA), the APEC region expanded by 4.2 per cent during the first half of 2018, which was faster than the 3.9 per cent growth during the same period in 2017. However, the rate of expansion in APEC GDP has moderated.
Growth in the value of merchandise trade also posted modest gains in the first half of this year, while trade volume growth slowed down. Collectively, APEC members account for more than half of global trade.
While GDP and trade growth showed signs of moderation, the analysis also points to declining foreign direct investments (FDI) flows amid an increase in the number of trade- and investment-restricting measures covering October 2017 to May 2018.
The region is forecast to grow at a moderate pace through 2019-2020 amid heightened uncertainty in trade and other policies, as well as higher inflation, exchange rate pressures, and episodes of financial market volatilities.
“There is much potential for growth in the Asia-Pacific region that could come from continued pick-up in global economic activity,” said Dr Denis Hew, Director of the APEC Policy Support Unit, which produced the report. “This growth should translate into sustained strength in domestic consumption.”
“To ensure that growth is balanced, sustainable and inclusive, APEC needs to boost reliable sources of growth, such as the services sector, and encourage more private investment,” Dr Hew added. “We also have to harness future drivers of growth like the digital economy and green technology, as well as implement productivity enhancing reforms.”
The report also addressed the paradox of a decades-long downward trend in labour productivity growth, even as digital technology has made work easier and more efficient.
“Computers have become more powerful, smaller and cheaper over the years, which has led to many innovations in how firms and people do work,” said Emmanuel San Andres, an analyst at the APEC Policy Support Unit who co-wrote the report. “But this has not translated to growth in labour productivity and real wages.”
“Addressing this downward trend in productivity requires new ways of doing things,” San Andres said. “Structural reforms, for example, will be needed to make sure that rules and institutions remain relevant and responsive to the digital economy.”
The report helps to set the tone for the Concluding Senior Officials Meeting and the APEC Ministers’ Meeting to be held this week in Port Moresby, as well as the gathering of APEC Leaders on 18 November.
These high-level discussions are some of the last and most important meetings of APEC 2018 under Papua New Guinea’s hosting, which focusses on harnessing new technologies to make economies more inclusive.
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