SINGAPORE (Dec 16): The ongoing US-China trade war and rising protectionism has resulted in slower economic growth for the Asia-Pacific region, according to a report released by the Pacific Economic Cooperation Council (PECC).
Released on Monday, the State of the Region report for 2019-2020 constitutes the results of a survey of 627 regional policy experts.
It illustrates how the mood across Asia-Pacific has soured since last year with expectations for global growth turning distinctly negative.
According to the report, regional economic growth is expected to slow to 3.3% in 2019, down from 3.8% in 2018. Experts, however, are more concerned with the sharp slowdown in the region’s export sector, which registered a growth of 0.9% this year, a significant plunge from 4% last year.
“In recent years, we have seen notable uncertainties in the realm of global economic governance, including protectionism and risk of fragmentation of the regional economic integration,” shares PECC co-chair Su Ge.
According to the survey, the top five risks to regional growth in the coming two to three years include increased protectionism and trade wars, lack of political leadership, as well as slowdowns in world trade growth and both the US and Chinese economies.
To be sure, some 64% of policy makers in the region are most concerned over escalating protectionism.
In addition, the report cautions that there is more to come in terms of increased protectionism and trade wars, as well as a further slowdown in world trade growth.
“After a slow multi-year recovery from the 2008 Global Financial Crisis, the green shoots of economic growth are now being weighed down by unprecedented policy risks and uncertainties,” reads the report.
“While governments are acting to moderate a slowdown through stimulus measures and primarily interest rate cuts, other actions are also needed,” it adds.
However, as PECC secretary general Eduardo Pedrosa sees it, not all is doom and gloom for the region, as the regional policy community is optimistic about growth prospects for the upcoming year.
“42% of respondents are bullish on Southeast Asia,” says Pedrosa. “We believe this is because there is strong momentum towards integration in the region with the Asean Economic Community, many of them are in a demographic sweet spot, and there may be expectations of trade diversion.”
The report sets out stakeholder views on a range of issues that officials will grapple with throughout the next year. Pedrosa points out that education, or upskilling in particular, emerged the most pressing issue, with some 86% of respondents rating education and training strategies to upskill the workforce as top priorities.
Looking ahead, the report notes that governments are undertaking measures to forestall a slowdown through significant stimulus measures, and recommends that these be complemented by significant economic reforms.
