According to a newly updated report issued by the APEC Policy Support Unit, the growth in GDP (gross domestic product) was lower than the 6 percent projected earlier.
"We are dealing with multiple headwinds that derail our push for recovery," the APEC Policy Support Unit’s director, Denis Hew, said.
"Adding to that, growth in APEC will remain uneven mostly due to disparities in pandemic management and vaccine coverage. China’s modest economic growth is also expected to have some impact on the economic performance of the region," Hew stated.
According to the report, the APEC region’s economic growth will continue at a moderate pace in the coming years, expanding to 4.2 percent in 2022 and 3.8 percent in 2023.
Higher inflation will pose an additional challenge as it has already driven some economies to tighten monetary policy settings, which could have a dampening effect on economic activity, it said.
In 2021, APEC’s inflation rate doubled to an average of 3 percent compared to 1.5 percent in 2020 thanks to higher energy and food prices, it added.
"We expect inflation to moderate to 2.5 percent in 2022, with a further decrease to 2.3 percent by 2023," said Rhea C. Hernando, a researcher with the APEC Policy Support Unit who authored the report.
"Authorities need to continue to anchor inflation expectations with clear monetary policy intentions, and this, along with the stabilization of global and supply conditions, will help bring down inflation," Hernando stated.
The report further highlighted how public debt around the region increased to around 65 percent of GDP in 2020, compared to the pre-pandemic 10-year average of 49 percent of GDP.
Such a significant increase was led by the massive fiscal response to cushion the blow of the health and economic crisis brought by COVID-19, Hernando said.
"Governments are faced with the inevitable option to scale back their fiscal stimulus and shift to a more targeted and calibrated approach to continue their support to vulnerable households and viable businesses," she added.
"However, narrowing fiscal space and tightening monetary policy could slow down consumption and overall economic activity," she said.
Moving forward, the report recommends that APEC economies continue to prioritize the health of the people in the region so that they can recover, reopen, and rebuild.
Related news: Report projects six-percent economic growth in APEC in 2021
"The message remains more or less the same: safeguard the free and rapid flow of medical supplies across borders to expand vaccination coverage. At the same time, we need to address vaccine hesitancy by focusing the information campaign on highlighting vaccine protection and correcting misinformation," Hew reiterated.
"In addition to this, economies need to ensure the availability of medical and essential workers as they are the key to recovery," he added.
Thailand, the host of APEC 2022, will lead the region’s effort towards charting a post-COVID-19 future for the Asia-Pacific region that is resilient, inclusive, balanced, and sustainable, guided by its theme— "Open, Connect, Balance," the report said.
Thailand will host the first round of technical meetings this February.
Related news: APEC pushes structural reform agenda for quality growth
Reporter: Yuni Arisandy Sinaga
Editor: Rahmad Nasution
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