Asia-Pacific Trade Growing, But Uncertainties Expected For 2018
The trade outlook for the Asia-Pacific region is positive for this year but some uncertainties are forecast for 2018, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said in its annual trade and investment report.
The report entitled, ‘Channelling Trade and Investment into Sustainable Development’ emphasizes that cutting trade costs and deepening regional cooperation are key to ensuring the benefits of trade and investment can be shared across the region. Such policy mix may result in $100 billion more exports for the region annually. Export growth is forecast at 4.5 per cent for 2017 and foreign direct investment is also expected to rebound this year, building upon fast growth in greenfield investment in 2016 and continued investment liberalization, according to ESCAP’s flagship publication.
Launching the report in Bangkok, United Nations Under-Secretary-General and ESCAP Executive Secretary Dr. Shamshad Akhtar, emphasized that an integrated approach to trade and investment liberalization is essential to achieving the Sustainable Development Goals (SDGs) in the region, but that SDG-targeted trade and investment policies and complementary domestic policies need to mitigate social and environmental impacts of trade and investment.
“The impact analysis of different policy scenarios featured in the report make it clear that SDGs cannot be achieved through protectionist policies,” said Dr Akhtar. “What we need is targeted trade and investment liberalization policies that are more inclusive and mindful of the social and environmental dimensions of sustainable development.”
The report noted that the expected growth of exports by developing Asia-Pacific economies is 4.8 per cent while that by developed countries in the region is 3.3 per cent. Countries previously affected by the slowdown of global value chains, such as Republic of Korea and the Philippines, are expected to enjoy significantly better trade prospects this year. At the same time, the rising prices of industrial commodities and fuel will contribute to dynamic growth for commodity exporters such as Australia, India, Indonesia, Islamic Republic of Iran, Kazakhstan, and others.
The study also anticipates that the export volume of Asia-Pacific region in 2018 will grow more modestly than in 2017 at 3.5 per cent while the import volume will increase by less than 3 per cent. Export and import prices, especially commodity prices, are not likely to increase, and in fact, may trend downward due to the potential slowdown of investment and consumption precipitated by rising uncertainties. The sluggish prices will cause trade value in 2018 to grow much slower than in 2017. At the same time, deepening uncertainties may also affect extent of investment liberalization which is found increasing GDP by $19.5 billion annually, while decreases inequality in the region by 0.02 per cent per year.
The report proposes a policy framework to further enhance the contribution of international trade and foreign direct investment to sustainable development. It also provides estimates of the economic, social and environmental impacts of alternative regional trade and investment liberalization policy scenarios, when implemented alone or in conjunction with selected domestic social and environmental policies. A strong message from the report is that integrated liberalization increases trade and GDP significantly more than any of the other stand-alone policy changes. This integrated approach facilitates the participation of countries in global value chains and significantly increases the competitiveness of regional exports. This integrated liberalization scenario provides strong evidence of the important synergies that can be achieved by liberalizing and facilitating trade and investment.