A new updated report from the APEC Policy Support Unit finds that the COVID-19 pandemic is causing a deeper contraction to the region’s
economy. The APEC region’s economic growth is now expected to decline by 3.7 percent in 2020, down from its initial
forecast of a 2.7 percent contraction in April, bringing the total output loss to a staggering USD 2.9 trillion.
These new projections are in line with the revisions by the International Monetary Fund in its recently updated World
Economic Outlook. Global growth is projected to fall to - 4.9 percent, compared to a decline of -3 percent estimated
earlier by the IMF.
“The protracted duration of the pandemic has caused worse than anticipated impacts on the global economy, with some
economies recently reporting a second wave of infection cases” said Dr Denis Hew, Director of the APEC Policy Support
Unit.
Dr Hew added that economic recovery is in the horizon but it is “highly dependent on the availability of vaccines and
treatments as well as the effectiveness of economic policies that are being implemented by economies to address the
pandemic”.
The updated report projects an economic recovery for the region of 5.7 percent in 2021, compared to the earlier estimate
of 6.3 percent. This economic rebound hinges on whether the pandemic can be contained over the second half of this year.
Video: COVID-19 Impacts on Economy, Supply Chains & Businesses | Dr Denis Hew of APEC Policy Support Unit
The APEC region’s growth declined by 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 recorded a bigger contraction in the first quarter from the combined impact of trade tensions and
supply chain disruptions. “In overall terms, merchandise trade in APEC has significantly decreased in both value and
volume this year,” explained Rhea C. Hernando, APEC Policy Unit’s researcher who wrote the updated report. “The
temporary restrictions imposed on food and medical supplies weakened trade even further in the first quarter of the
year.”
The region’s value of trade in goods dropped by 5.8 percent for exports and 4.1 percent for imports.
Foreign direct investment shares similar sentiment with inflows to the APEC region going down by 3.1 percent, while
greenfield investments dropped sharply by 20.4 percent in 2019.
In the midst of uncertainties, the report recommends APEC economies to take decisive actions including intensifying
efforts towards containment measures to avoid further waves of the pandemic, while at the same time maintaining fiscal
and monetary stimulus measures to help alleviate the risk of people falling into poverty and businesses going bankrupt.
The report also urged member economies to invest in digital technology, including building or boosting technological
infrastructure, equipping workers with digital skills and modernizing business and governance processes. This investment
could contribute to making economies more innovative and dynamic while expanding access and opportunities to everyone.
For more information on the July 2020 Update of the APEC Regional Trends Analysis “Deeper contraction calls for decisive
action” policy brief by APEC Policy Support Unit, visit this page.