Trade growth lags in region: APEC targets increased household consumption

CEBU, Philippines - Greater structural reform within Asia-Paci-fic Economic Cooperation member economies is needed to drive household consumption and ensure resilient, inclusive growth across the region amid rising uncertainty in global markets.

This was contained in a new policy brief from the APEC Policy Support Unit issued in conjunction with this week’s meetings of the APEC Finance Ministers and Structural Reform Ministers in Cebu.

“Compensating for ebbing trade flows is the underlying concern,” it said, adding that “trade growth, that is the traditional engine of Asia-Pacific economies, has now lagged behind GDP growth in the APEC region” for three straight years, which is “the first time this has occurred since APEC’s founding in 1989.” 

“A ‘new normal’ characterized by slower trade growth is prompting Asia-Pacific economies to capitalize on household consumption as an emerging driver of productivity,” said Dr. Denis Hew, APEC Policy Support Unit director, in a statement.

“Putting more money in people’s pockets encourages spending and lifts economies, which is what structural reform can help to make possible,” he said.

“The adoption of policies that promote the efficient use of resources within economies and support business development, job creation and increases in wages are a big priority moving forward,” he added.

“It comes down to lowering complex behind-the-border barriers to business and social mobility on which next generation growth in the Asia-Pacific greatly depends.”

The brief also stated that “significant economic and employment inroads could be attainable through stepped-up fiscal rationalization, financial reform, trade liberalization and development of institutions to improve the management of human, material and financial resources.”

It described as “priorities” policies that promote human capital investment and social protection.

“Structural reforms not only contribute to productivity but they can also help to make growth more inclusive,” also said Emmanuel San Andres, APEC Policy Support Unit analyst and brief co-author.

San Andres said that “there are particular gains to be made when it comes to opening up economic opportunities for women and vulnerable communities, increasing competitiveness, encouraging innovation and improving social protection.”

 “The reform agenda within APEC is coming together which is promising, though the region’s economies are really only at the end of the beginning of this long, hard slog,” he said.

He further said that the launch of the Renewed APEC Agenda for Structural Reform 2016-2020 will position member economies to “cohesively tackle the difficult task of policy implementation that lies ahead.”

The brief also said that current efforts are focused on enhancing science and technology education, competitiveness in the services sector, micro, small and medium enterprise parti-cipation in international production and supply chains, and infrastructure and connectivity across APEC economies.  — (FREEMAN)