SINGAPORE: A rise in intra-regional trade, investment and domestic consumption, helped sustain growth in the Asia Pacific Economic Cooperation (Apec) region in 2012, despite the setback to global economic recovery.
This is according to new Apec Policy Support Unit research presented at the Apec Ministers Responsible for Trade meeting on Saturday in Surabaya, Indonesia.
Real global gross domestic product (GDP) growth slowed to an estimated 3.2 per cent in 2012 from 3.9 per cent in 2011.
Although real GDP in the Apec region grew by an estimated 4.1 per cent in 2012, the same growth rate as in 2011, weak import demand from Europe and the United States caused growth to vary among Apec members.
“GDP growth in the newly industrialised Asian economies slowed sharply to 1.7 per cent in 2012, less than half of the growth rate previously,” said Dr Denis Hew, director of Apec’s Policy Support Unit.
He said this was partly due to reduced export demand for IT goods.
“But on the other hand, some Apec economies in Southeast Asia and Latin America enjoyed strong growth, due to increasingly resilient domestic consumption and investment, offsetting the weakness in the export sector,” he added.
In addition, foreign direct investment (FDI) inflows or the amount of foreign corporate investment coming into Chile rose by 53 per cent while Peru saw a 34 per cent increase.
Several Southeast Asian economies, including the Philippines, Thailand and Vietnam, also enjoyed an increase in FDI inflows while Indonesia maintained its record high level.
This surge of capital flowing into emerging markets in 2012 is partially a result of expansionary monetary policy by some advanced economies, creating ultra-low interest rates and an abundance of liquidity.
“At the same time, these low interest rates and abundant liquidity in emerging markets have also created risks for the Apec region, including the possibility of asset price bubbles,” said Dr Alan Bollard, the Apec Secretariat’s executive director.
He said this issue is being played out in some Asian property markets and is of concern.
Another worry is the virtually non-existent trade growth in the world.
Trade performance in 2012 was hard hit by weak import demand from Europe and other developed economies.
For the Apec region, the value of exports grew by just 2.6 per cent in 2012 to US$8.7 trillion, indicating a significant slowdown from a growth rate of 17.2 per cent in the previous year.
However, intra-Apec trade numbers were encouraging as trade within the region outperformed the rest of the world, growing by 3.9 per cent compared with a contraction of 1.8 per cent for the rest of the world.
“Still, the uncertainty and uneven recovery in the global economy presents concerns for the Asia-Pacific region,” explained Bollard.
“A challenge will be to resist protectionism in the region and globally,” he added.
Hew said one of the recommendations to the Ministers in Surabaya was to promote collective action in the Apec region and the wider global community, while refraining from raising new trade barriers and protectionist measures.
“Ultimately, sustaining our momentum towards free and open trade will be the only way to ensure prosperity for the region in the long-term, “ he added. — Bernama