The APEC region’s economic growth is now forecast to decline by 3.7 percent in 2020, down from the initial forecast of a 2.7-percent contraction in April, which would bring the total output loss to a staggering US$2.9 trillion, the APEC Policy Support Unit noted in a written statement received here on Monday.
The new projection is in line with the revisions made by the International Monetary Fund (IMF) in its recently updated World Economic Outlook report.
Global growth is now projected to shrink 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 Denis Hew, director of the APEC Policy Support Unit.
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Hew added that an economic recovery is within reach, but it would be "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. An economic rebound would hinge on whether the pandemic can be contained over the second half of this year, according to the report.
In the first quarter of this year, the APEC region's growth declined by 2.2 percent due to travel restrictions and widespread lockdown measures, which weakened domestic consumption, and hampered trade and investment.
Trade tensions coupled with supply chain disruptions led to a big contraction in merchandise trade.
"In overall terms, merchandise trade in APEC has significantly decreased in both value and volume this year," explained Rhea C. Hernando, a researcher with the APEC Policy Unit, 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," Hernando added.
The region's value of trade in goods dropped by 5.8 percent for exports and 4.1 percent for imports.
Foreign direct investment inflows to the APEC region slumped by 3.1 percent, while greenfield investments dropped sharply by 20.4 percent in 2019.
In the midst of uncertainties, APEC economies must take decisive action, 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 reduce the risk of people falling into poverty and businesses going bankrupt, the report recommended.
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.
The investment could contribute to making economies more innovative and dynamic while expanding access and opportunities to everyone, the report stated.
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