Asia-Pacific Trade And Investment Briefs 2024/5: Regional Growth Outperforms Global Average

Asia and the Pacific outperformed global trade averages in 2024, revealing the region’s resilience and leadership in global trade and investment amidst significant economic uncertainties. The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) today released its Asia-Pacific Trade and Investment Briefs 2024/25 highlighting key trends and forecasts in merchandise and services trade, preferential trade agreements and foreign direct investment.

Stronger trade growth driven by regional economic recovery and boosted consumer spending

Real exports and imports in the region grew by 3.4 per cent and 3.6 per cent, respectively, compared to global growth rates of 1.8 per cent and 2.2 per cent. The region’s share of global nominal exports and imports rose slightly in 2024 to 38.9 per cent and 36.7 per cent, reflecting stronger trade growth.

Most subregions also saw real-term trade expansion, with South-East Asia (5.8 per cent) leading the way. Conversely, the Pacific subregion experienced a slight decline in exports.

Intra-regional trade remains significant, comprising nearly 60 per cent of the region's total exports. The ongoing trade reconfiguration reflects regional supply chain adjustments to geopolitics and structural changes.

However, significant uncertainties, including slower-than-expected recovery in major economies and potential trade tensions, dampen growth prospects in 2025 compared to 2024 levels. Given these risks, ESCAP projects real merchandise exports in the region to grow between 2.7 per cent and 3.5 per cent in 2025, with developing economies experiencing a more modest growth than developed economies.

Booming commercial services trade

The region’s commercial services trade continued its recovery in 2024, with exports and imports rising by 8.6 per cent and 6.2 per cent, respectively, outpacing global averages. This was primarily driven by the recovery of travel services, accounting for 20.5 per cent of the region’s exports, alongside significant growth in construction, goods-related services and digitally deliverable services.

Looking ahead, commercial services exports and imports are projected to grow by 8 per cent and 10.9 per cent in 2025, fuelled by expansions in the travel sector and digitally deliverable services. Developed economies are anticipated to outperform others in the region. While more resilient, commercial services trade may face indirect downward pressures from disrupted merchandise trade and policy uncertainty.

Asia and the Pacific remains a top destination for investors, FDI trends reflect regional strengths

The communications industry saw some of the most significant growth in foreign direct investments (FDI) in 2024, rising 69 per cent to $40 billion placing it as the second-largest sector behind renewable energy at $58 billion. International investors are favoring Asia and the Pacific due to its domestic market growth and proximity to consumers.

Overall Greenfield FDI inflows to Asia and the Pacific decreased by 14 per cent in 2024 following a record-breaking 2023. Greenfield FDI investments in climate sectors continue to trend upwards, surpassing the downward trending coal, oil and gas sectors.

India emerged as the region’s top FDI destination, attracting $76 billion, driven by semiconductor and renewable energy projects. The brief also highlights the increasing role of intra-regional investments, particularly in high-tech sectors like semiconductors and data centers.

Actively engaging in innovative and sustainable cooperation platforms

The Asia-Pacific region continues to be the largest contributor to the worldwide build-up of preferential trade agreements (PTAs), accounting for nearly 60 per cent of PTAs in force worldwide. The region's "noodle bowl" of trade agreements now includes 374 PTAs.

New agreements signed this year indicate a continuing trend towards diversifying trade partners with economies outside the region as well as the growing inclusion of sustainable development and digital trade provisions.

The region set new benchmarks by broadening its regional cooperation beyond traditional platforms and embracing innovative frameworks. Asia-Pacific economies are actively engaging in trade agreements that integrate trade, investment and environmental sustainability, such as the ‘Green Economy Agreement’ and the ‘Agreement on Climate Change, Trade and Sustainability’ (ACCTS). At the same time, the number and memberships of stand-alone ‘Digital Economy Agreements’ in the region have grown significantly. Additionally, they have expanded their influence through both South-South and North-South strategic partnerships such as BRICS and the Indo-Pacific Economic Framework (IPEF).

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