Economic growth in Asia-Pacific affected by Covid-19

ECONOMIC growth in the Asia Pacific Economic Cooperation (Apec) region declined by 3.7 per cent in the first six months of this year and is expected to contract by 2.5 per cent for the whole year, according to a report.
A report by the Apec support unit released earlier this week said this was equal to an output loss of US$1.8 trillion (K6.17 trillion).
The report stated that this was due to the economic fallout from the Covid-19 pandemic.
It added that this would be the first time in three decades that the region’s economy would contract.
Apec policy support unit director Dr Denis Hew said: “Apec was formed more than 30 years ago and has seen economic recessions, financial crises, commodity price volatility, pandemics and terrorist attacks. Yet, in terms of economic losses, this has been a year like no other.”
The report noted that unemployment rates among Apec economies had surged averaging 4.8 per cent as of September, with more than 74 million people looking for work, while consumption, trade and investments had reversed to contractions that were bigger than expected.
Household consumption shrunk by 7.1 per cent during the first half of the year from an average growth rate of three per cent in the first half of 2019.
Investments also contracted by 11.2 per cent, following modest growth of 1.1 per cent during the same period last year.
Growth in the volume of merchandise exports fell by 6.2 per cent and imports recorded a sharp decline of 7.2 per cent in the first half of 2020, down from tepid growth in the first half of 2019.
“Trade performance in the Apec region was adversely affected by the combined impact of the temporary closure of borders, disruptions in global supply chains, and persistent trade and technology tensions,” Dr Hew said.
Positive contribution to growth comes from government spending with an increase of 2.8 per cent in the first half of this year, reflecting fiscal measures implemented by economies to provide support to various sectors, in particular to bolster the health system, and to provide targeted liquidity support to households and businesses, including small businesses.
Dr Hew highlighted that there were already signs of recovery around the Apec region, especially coming from economies that were able to curb the spread of the virus early on and had reopened their economies, as well as improved manufacturing activities.
Those green shoots brought growth projections of 5.2 per cent in 2021, reflecting an economic rebound for the region.
The recent Apec regional trends emphasised the need for Apec economies to continue deploying fiscal and monetary support measures so that health systems remained able to cope with continued, and for some economies, resurging or rising cases of infection.
The report also recommends member economies to introduce, implement and enforce structural reforms to support recovery in the medium to long term.
Meanwhile, leaders and ministers from Apec’s 21 member economies will convene virtually this week, led by Malaysia as the host of Apec 2020, to address the challenges of the pandemic in the region and to pave the road to recovery.