Tuesday, June 15, 2021
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Economic Growth In The APEC Region Better Than Expected; Uncertainty Remains


New economic data from across the APEC region shows a
softer economic contraction of 1.9 percent in 2020, with
continued fiscal measures leading to a rise in government
consumption and improved investment and household
consumption.

According to the latest APEC
Regional Trends Analysis
, household
consumption, APEC’s main driver of growth, improved to
-3.9 percent in the second half of 2020 on a year-on-year
basis, as compared to -7.0 percent in the first half of last
year. Investment followed the same trend, recording a
smaller decline of -6.1 percent in the second half of 2020
compared to -10.5 percent in the first half.

The
report notes that governments across the region have learned
effective ways to manage the pandemic and people have
learned to adapt to new ways of earning a living. This has
resulted in a gradual reopening and resumption of economic
activities, which boosted consumption.

The region’s
economy is estimated to grow by 6.3 percent in 2021, with an
expected strong increase in domestic and global activity, as
pent-up demand is unleashed. The development and production
of multiple vaccines also boost optimism for a more durable
economic recovery.

“The worst fears from last year
did not come to pass as we saw stronger economic rebound in
the second half of last year, and this will likely continue
throughout 2021,” said Dr Denis Hew, Director of the APEC
Policy Support Unit. “However, the region continues to
face significant uncertainties, largely linked to how the
pandemic is evolving, while job losses due to the pandemic
and expectations of higher inflation this year could
suppress consumer spending.”

The weakness in
investments, which is projected to extend to 2021, could
also affect growth, according to the report. “The
start-stop economic reopening scenario as economies navigate
through a resurgence of infections could hold back
investment activity,” Dr Hew added.

 

The
report warns that the uneven recovery in the region is
largely related to differences in vaccine access and
availability. The majority of APEC member economies could
achieve widespread immunization by mid-2022 onwards, with
some anticipated to do so earlier, by the end of
2021.

The disproportionate impact of the pandemic is
also highlighted in the report. The pandemic affected
everyone everywhere, women, young people, the elderly and
the poor experienced layers of negative impacts.

Most
micro, small and medium enterprises lack the capital and
technological expertise to make their shift to online,
translating into losses and closures and adding to rising
livelihood fragility and poverty.

“People with
insufficient digital skills and equipment or those living in
areas where access to the internet is unreliable or
expensive are denied the chance to reconnect, unable to
continue their work and study,” noted Rhea C. Hernando, a
macroeconomist with the APEC Policy Support
Unit.

Unequal access to vaccines also aggravated the
divergence in speed and strength of economic recovery in the
region. Lower-income economies that rely largely on the
COVID-19 Vaccines Global Access (COVAX) facility for their
supply of vaccines are in for a longer battle, making the
effort to economic recovery very fragile amid higher risk of
virus resurgence.

“The pandemic has exposed the
underlying gaps and inequality that have posed significant
challenges to policymakers and societies,” Hernando
added.

“We need to ensure that no one is left behind
in our recovery journey by working together to contain the
pandemic, implement structural reforms to boost human
capital development and protect the environment,” she
concluded.

View the latest APEC
Regional Trends Analysis, May
2021

See the
Economy
in 2020 and the Recovery Ahead
infographic

© Scoop Media

 



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