APEC growth to gradually accelerate

APEC growth to gradually accelerate: analysis

Issued By the APEC Policy Support Unit

Surabaya, Indonesia, 17 Apr 2013

- Economic activity in many APEC member economies was adversely affected by heightened concerns about the Euro area’s sovereign debt issues and weaker trade last year. But growth in the region in general appears to be improving and is set to gradually accelerate which could provide a boost to the world economy.

The gross domestic product of APEC economies is forecast to rise 4.2 percent in 2013 and 4.7 percent in 2014. By contrast, growth in the region was unchanged year-on-year in 2012 at 4.1 percent, reveals a new APEC Economic Trends Analysis that was released on Wednesday.

APEC Trade Ministers will meet under this backdrop in Surabaya this weekend. The analysis was produced by the APEC Policy Support Unit to help Ministers gain a greater understanding of the broader economic environment in the region.

“There are ongoing concerns about the health of public finances and the banking system, especially in Europe, as well as price pressures on property and stock markets,” said Dr Hew who is the Director of the APEC Policy Support Unit.

“Moderated industrial production, an increase in trade restrictive measures and the reduced availability of trade finance adversely affected global trade last year. By October 2012, the value of global exports barely grew from the level seen in 2011,” he added.

Weakening trade was a particular challenge for small, open APEC economies. Gross domestic product growth among them slowed to 1.7 percent in 2012, less than half of their rate of economic expansion in the previous year.

“Activity in some large APEC economies remains below optimum levels but is steadily improving,” noted Dr Alan Bollard, Executive Director of the APEC Secretariat. “This, combined with the continued resilience of emerging economies in the region due to strong domestic demand and investment, is contributing to a more favorable growth outlook for the short to medium term.”

Global trade appears to be getting a lift from these developments. The volume of world imports increased 4.1 percent year-on-year in January 2013 which was the indicator’s sharpest increase since September 2011.

The report states that fine-tuning the pace and composition of fiscal adjustment packages, attention to capital flows and actions to strengthen financial markets and institutions are needed to keep APEC economies moving in the right direction.

It also calls upon policymakers to support the channeling of capital inflows towards productive infrastructure investment.

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