INTERNATIONAL TRADE DIPS, ASIA-PACIFIC PERFORMS BETTER THAN REST OF THE WORLD

By Linda Khoo Hui Li

BANGKOK, Dec 23 -- The global international trade is projected to dip by 14.5 per cent this year, the worst economic performance since the Great Depression, but Asia and the Pacific is expected to perform better than the rest of the world in 2020, the United Nations (UN) said in its trade briefs.

According to the new Asia-Pacific Trade and Investment Trends briefs issued by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) on Tuesday, the COVID-19 pandemic, increasing trade tensions and slowing global economy have paved the way for worst performance.

“The region’s prominence in merchandise trade is expected to rise to an all-time high this year, accounting for 41.8 per cent of the world’s exports and 38.2 per cent of global imports.

“In 2021, merchandise trade volumes are expected to rebound by 5.8 per cent and 6.2 per cent of real exports and imports, respectively,” it said.

Meanwhile, the trade briefs said greenfield foreign direct investment (FDI) dropped by 40 per cent compared to the same period in 2019.

“Lockdown measures, including the physical closure of businesses, manufacturing plants and construction sites, were responsible for delayed and canceled investment projects in 2020,” it said.

The trade briefs said FDI is expected to remain below pre-crisis levels throughout 2021 and the outlook beyond 2021 is highly uncertain and dependent on the duration of the crisis.

The UN said the recent signing of the Regional Comprehensive Economic Partnership, however, may help FDI bounce back in the recovery period, especially for smaller and least developed countries in the group.

However, ESCAP projected a sluggish recovery in 2021. 

It said macroeconomic conditions remain unfavourable for many Asia-Pacific economies with high unemployment rates, deflation, indebtedness and geopolitical tensions among the structural factors hindering the recovery of countries.

For small economies, the path towards full economic recovery may also be challenged by the potential permanent damage done to the travel and tourism industries, which are their major sources of income and employment, it added.

Meanwhile, UN Under-Secretary-General and Executive Secretary of ESCAP Armida Salsiah Alisjahbana said the pandemic has a devastating effect on developed and developing economies alike, threatening to bring possibly millions of people back to poverty and unemployment.

“These people will not only need more aid, but also more trade. I urge countries in the region to work towards developing a better set of trade rules that are resilient in times of crisis and stimulate sustainable economic recovery for inclusive and greener economies,” she said.

-- BERNAMA