By Victor V. Saulon

Growth in APEC economies seen slowing to 3.1% this year

Posted on November 17, 2015

ECONOMIC GROWTH in the Asia-Pacific Economic Cooperation (APEC) bloc is expected to be “moderate” this year at around 3.1%, lower than 3.4% recorded last year, the regional bloc’s policy support group said yesterday.

Delegates at the Asia-Pacific Economic Cooperation Ministerial Meeting in Manila on Nov. 16. -- AFP
“We expect recovery in 2016 to about 3.4% for the region as a whole,” Dr. Dennis Hew, director of the APEC Policy Support Unit, said yesterday in a briefing at the APEC international media center in Pasay City.

Trade is expected to have slowed down this year, with exports likely dropping by 2.3% and imports declining 2.6%. An improvement is seen for both next year.

For the second quarter, the region’s gross domestic product growth eased to 3.1% from 3.4% a year earlier, Mr. Hew said. The latest quarterly figure was also slightly lower than the 3.2% growth posted in the second.

“We’re seeing a much more moderate phase of growth, still positive for the region,” he said.

Private consumption continues to be the main driver of growth across the region, with gains ranging from 0.2% to 9.1% during the quarter, he said.

“Much of that is driven by a much more lower interest rate regime in the region,” he said.

“We’ve also seen the recent drop in oil prices” as increasing the disposable income for households in the region, he said.

Mr. Hew cited a report by the APEC support unit as showing that since the 2008 financial crisis, the link between economic growth and private consumption has become more significant, much more than the traditional relationship between trade and growth.

Trade in the region has contracted in the first six months of the year, reflecting “a very slow global economic recovery in the region in terms of growth.”

“We are also concerned about China’s economy, whether China will be having a hard landing or a soft landing in terms of economic growth. For the time being, we’re still looking at economic growth in China moderating to about 6.8%-7% this year,” Mr. Hew said.

The growth forecast is shared by the Pacific Economic Cooperation Council (PECC), which expects growth in the region to be 3.2% this year, the slowest rate since the global financial crisis of 2008-2009.

In its annual State of the Region report, PECC said almost 40% of respondents to its yearly survey expected weaker growth for the global economy over the next 12 months, citing a slowdown in the Chinese economy; failure to implement structural reforms; a lack of political leadership; a slowdown in the US economy; and a lack of adequate infrastructure as the top risks to growth.

“APEC’s agenda has moved on from a focus on trade liberalization to addressing a broader set of issues since the Philippines last hosted the meetings in 1996,” said Eduardo Pedrosa, coordinator of the report and secretary general of PECC.

“While continuing with the implementation of the vision APEC set out when it started, there needs to be a much greater focus on ensuring that future growth is more inclusive. The top areas identified by our survey for promoting inclusive growth were: provision of public education; reducing corruption; providing support to micro, small, and medium enterprises; quality of health services; and social safety nets including health care, unemployment and pensions reforms,” he said.

PECC, an official observer in the APEC process, is a nonprofit, policy-oriented, regional organization that focuses on the promotion of Asia-Pacific cooperation.