THE Asia-Pacific Economic Cooperation (APEC) bloc said its member economies are expected to post contractions of 2.5% this year on average, equivalent to about $1.8 trillion worth of lost output, as a result of the economic disruption caused by the pandemic.
“Prolonged stay-at-home measures, mandatory or voluntary, to safeguard health amid an ongoing pandemic, have translated into significant cutbacks in consumption and investments. As a result, the APEC region is expected to contract in 2020 by 2.5%,” the APEC Policy Support Unit said in its Regional Trends Analysis report issued Monday.
The new forecast represents an upgrade from the previous estimate of a 2.7% contraction issued in May, but if the forecast is borne out, it will be the first annual contraction among the member economies in three decades, it said.
APEC has 21 members: the Philippines, Australia, Brunei, Canada, Chile. China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Russia, Singapore, Chinese Taipei, Thailand, the United States and Vietnam.
APEC economies contracted 3.7% in the first half after growing 3.4% a year earlier due to the lockdowns imposed on both sides of the Pacific.
Domestic household spending, which has consistently been a growth driver for the bloc, declined 7.1% in those six months while investment fell 11.2%.
Trading activity was also severely affected by the travel bans and border closures imposed to curb the spread of coronavirus disease 2019 (COVID-19), while factory activity was also weighed down by lockdowns and weak demand.
“COVID-19 has been hardest on the poorest and most vulnerable in our societies: the people who can least afford healthcare, have the least access to infrastructure and technology and with the most precarious hold on jobs,” it said.
APEC’s policy support unit said member-economies should be supported by fiscal and monetary policy actions to help bring back confidence and stimulate growth.
However, it said countries struggling to contain the spread of the virus will likely lag the recovery since the business environment will not improve as rapidly.
It expects APEC members to grow 5.2% next year, lower than the earlier projection of 6.3%.
“GDP growth projections for 2021 reflect an economic rebound for the APEC region and the world at 5.2%, although lower compared to earlier forecasts. The lower projection reflects uneven growth across economies, with those that have managed to rein in the pandemic and reopened earlier expected to turn in better output outturns, while other economies, particularly where COVID-19 cases are either rising or resurging, are projected to grow at a slower pace,” it said.
The Philippines is among the economies struggling to bring down case numbers. There were 1,530 new COVID-19 cases reported Sunday, which brought the total to 407,838, according to the official count.
APEC said a resurgence of coronavirus will remain the “most dominant and dangerous” downside risk to the growth outlook as this threatens the capacity of health systems and may result in new rounds of lockdowns.
Moving forward, APEC said members should also push forward with their structural reforms and learn to adopt new technologies to ensure their post-crisis economies are resilient.
“Much work is also needed in the medium term to ensure a firmer recovery. What is imperative and appropriate could vary among economies at different stages of economic and technological development, but structural reforms need to be introduced, implemented and enforced now,” it said.