MERCHANDISE trade in the Asia-Pacific region is “worrying,” and the current economic and trade slowdown is likely not a temporary phenomenon, according to a report released last week by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
The Asia-Pacific Trade and Investment Report (APTIR) 2016, an annual publication of the Trade, Investment and Innovation Division of United Nations ESCAP said that “2015-2016 has been a worrying period for trade and investment in the Asia-Pacific region and worldwide, and there are few signs that the current economic and trade slowdown is simply a temporary phenomenon.”
The UN agency said that the pattern experienced in the past two years “may be the result of a change in the fundamental structure of world trade, which might lead to persistent trade stagnation.”
The APTIR 2016 report said the main causes for trade faltering in 2015 and previous years ranged from cyclical to structural, including sluggish global economic growth, downward movement of commodity prices, in particular oil, adverse movements of exchange rates, capital flow volatility, maturation of global value chains, and a decline in productivity growth.
“Most of these factors will have also been at work in 2016, although later in the year some economic indicators signaled more robust performance and return of stability, at least in emerging markets in Asia,” the report added.
In light of some positive signs in the later part of this year, ESCAP said, “expectations are that nominal exports and imports will bounce back in 2017 with a 4.5 percent growth in exports and 6.1 percent growth in imports.
The 2017 expansion of trade will be due to a mixture of expected increased prices and expected real growth; export and import price indices are expected to grow by 3 percent and 2.3 percent, respectively, while export and import volumes are projected to increase by 1.5 percent and 3.8 percent, respectively.”
The report did highlight some positive developments, in particular the expansion of cross-border paperless trade as one of the approaches to deal with the upward pressure on the trade costs, suggesting that governments were becoming more supportive of digital trade and documentation.
“Accepting the rising importance of e-commerce as a new trade platform, there is opening for the possible changes in the focus of trade and investment policies in order to leverage the potential of e-commerce to support intraregional trade,” the report explained.
“Further deepening and broadening of regional cooperation and integration through initiatives such as the One Belt-One Road are expected to create growth in demand for FDI across the region. A similar effect is expected from infrastructural investment in support of improved trade facilitation and implementation of the WTO Trade Facilitation Agreement, which is moving steadily towards ratification in WTO,” it added.