APEC growth expected to soften in 2015, recover in 2016

0
296

1676-Economic Trends_CoverAsia-Pacific economies continue to grow but at a moderated pace on account of slowing global trade, says a new Asia-Pacific Economic Cooperation (APEC) economic analysis.

Growth among 21 APEC economies softened to 3.1% in the second quarter of 2015, down from 3.2% in the first quarter and 3.4% a year ago, according to the latest “APEC Economic Trends Analysis.”

The report said the growth slowdown reflected the prolonged weakness in global economic activity, as the modest recovery in advanced economies was matched by a general slowdown in emerging market economies.

The moderation in gross domestic product (GDP) levels could be attributed to declining investments and lackluster exports, according to the report.

“Economies across the Asia-Pacific continue to grow but find themselves in a holding pattern of lower growth in the absence of high trade volumes,” said Alan Bollard, executive director of the APEC Secretariat.

“Private consumption is helping to compensate but must be tapped into more aggressively to keep the regions’ economies on track,” he added.

“Market uncertainty and protectionist pressures are a concern but trade distorting measures have been generally kept at bay,” Bollard said.

“The fact is that economies in the region are still highly trade dependent and opportunities to grow are very much out there but there is a recognition in APEC that traditional approaches are not enough.”

Trade in the APEC region continues to weaken, contracting during the first half of 2015. Goods exports are expected to rise 2.3% for the full year and climb to 3.3% in 2016 in response to rebounding global demand. Yet this is still more than a percentage point below 2014 levels.

Foreign direct investment inflows to APEC economies dropped 22.1% to US$651.8 billion in 2014 compared to $836.9 billion the previous year, reflecting investors’ bearish sentiments. Outflows from the APEC region increased by 5.1% in 2014, slower than the 7.5% pace recorded in 2013.

The report forecast the APEC region would grow by 3.1% in 2015, slightly below its 2014 GDP expansion of 3.4%.

In 2016, the APEC region is expected to post a stronger GDP growth rate of 3.4%, although lower than the world GDP forecast of 3.6%, said the report. This reflects an upward trend in advanced economies and a more upbeat export performance among developing economies next year.