A recent report by Singapore-based Pacific Economic Cooperation Council (PECC) said global economic recovery is set to be back next year as the world would contain the COVID-19 pandemic.
The recovery, however, would be uneven across countries and regions, the network of member committees composed of individuals and institutions dedicated to promoting cooperation across the Asia Pacific region said.
For trade, exports and imports figures are expected to fall by 8.6 per cent and 9.7 per cent respectively in 2020 but will rebound to 7.8 per cent and 9.2 per cent growth in 2021. However, this is unlikely to offset losses in the medium-term as the risk of protectionism and slowing trade growth have weighed in heavily on coincidence for a sustainable recovery, the report said.
“The economic outlook for the Asia-Pacific has improved somewhat in recent months, but recovery will be uneven and fragile as the global pandemic has deepened in some places. Asia-Pacific economies are expected to shrink by about 3.1 per cent in 2020. Growth of 5 per cent is now expected next year which is then expected to decline towards 3.5 per cent in subsequent years,” the report said.
“While there is hope for a recovery in 2021, the risk of protectionism holds back investment in new jobs and innovation, it will be essential for the region to respond appropriately and decisively in order to restore condence for sustainable recovery,” according to PECC secretary general Eduardo Pedrosa.
As per the report, foreign direct investment (FDI) has also taken a hit and is expected to drop below $1 trillion for the first time since 2009. The impact of widespread lockdown, demand shock and policy uncertainty have affected both greenfield investment which has seen a 30 per cent drop, and cross-border mergers and acquisitions that fell by 21 per cent.
Prolonged shutdown of economic activities is likely to have a larger impact on emerging economies that are reliant on foreign investment for industrial activity and infrastructure development.
This article orignially appeared in Fibre2Fashion