Higher living costs hinder our ability to drive towards a steady economic recovery post-pandemic.
Jakarta (ANTARA) - The Asia-Pacific Economic Cooperation (APEC) region’s economic growth is expected to climb slightly to 3.1 percent in 2023 after moderating to 2.6 percent in 2022.

However, the growth in the APEC region is expected to slow down to 2.8 percent in 2024, according to a new economic analysis published by the APEC Policy Support Unit (PSU).

"Higher living costs hinder our ability to drive towards a steady economic recovery post-pandemic," Director of the PSU Carlos Kuriyama said, according to a release received from the APEC Secretariat here on Thursday.

"We see narrowing fiscal space and surging debts following the massive stimulus measures taken to preserve lives and livelihoods during COVID-19," he added.

"Despite these efforts, income levels have not recovered to pre-pandemic levels in most APEC economies, and inequality has widened, hitting the most vulnerable populations the hardest," he observed.

According to the APEC Regional Trends Analysis report, general government gross debt reached its highest level ever in 2022: 112 percent of the gross domestic product (GDP) for advanced economies and 65 percent of the GDP for the APEC region.

The report highlighted that supply and demand disruptions due to the compounded effect of geopolitical issues have put pressure on prices. The inflation rate in APEC reached 5.9 percent in 2022, up from 2.9 percent in 2021. It is projected to moderate to 4.4 percent this year.

"Stubborn inflation aggravates income inequality, and while the majority of APEC economies have increased their interest rates to bring down inflation, the announcement by oil-exporting economies to reduce oil production is fueling inflation concerns," a senior researcher with the PSU, Rhea C. Hernando, said.

Trade performance also declined in 2022 due to weak global demand. The volume of APEC’s merchandise exports and imports declined to 1.1 percent and 1.2 percent, respectively, compared to 2021, when they were recorded at 10.6 percent and 11 percent, respectively.

"As the momentum of the pandemic-related recovery fades for trade, it is likely that merchandise trade volume will post low growth rates as well this year," Hernando predicted.

She said that one area of concern for APEC member economies is the accumulation of trade-restrictive measures, especially those related to export restrictions and bans.

"On top of that, we are seeing an upward trend in the number of trade remedies in force, such as anti-dumping measures and countervailing duties," she added.

On a positive note, the easing of cross-border travel restrictions has buoyed trade in commercial services, with travel services driving the largest gains, followed by transport services and goods-related services.

The total export and import of commercial services trade in APEC grew by 15 percent and 17.4 percent, respectively, in the period from January to September 2022.

Kuriyama emphasized that one of the many reasons why APEC was established in 1989 was to lift people out of poverty and improve living standards.

"We are now faced with the fact that living standards have declined due to the pandemic with significant jobs and income losses," he said.

"Our main task should focus on how to ensure that we don’t fall back on our progress and that the future of globalization takes into account equity and equality, leaving no one behind," he added.

Therefore, Kuriyama said, APEC members need to strengthen regional cooperation to encourage inclusive dialogue and concerted efforts to achieve their growth objectives.

"Ensuring trade remains open is one thing, but to close educational, skills, and digital gaps and open up more opportunities for our people is an essential part of the recovery," he stated.

The latest APEC Regional Trends Analysis report was unveiled in Detroit on the eve of the APEC Ministers Responsible for Trade Meeting.

The findings and analysis provided in the report will guide the ministers’ discussion and support informed decision-making to achieve APEC’s vision of an open, dynamic, resilient, and peaceful Asia-Pacific community.

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Reporter: Yuni Arisandy Sinaga
Editor: Rahmad Nasution
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