The APEC region saw a 6.1% increase in economic growth in the first quarter of 2021, rebounding strongly from a 2% decline in the first quarter of 2020, according to an updated report by the APEC Policy Support Unit. This number comfortably puts the region on track to meet growth expectations for the year, which is now estimated at 6.4%, slightly above the previous prediction.
The strong growth in the first quarter of 2021 is due to a combination of factors, including the low benchmark after a substantial economic contraction a year ago as well as higher public spending given the continued impact of the pandemic on people. economic activities, while domestic consumption has increased significantly. during this period.
In the short term, the APEC Policy Support Unit still sees sustained stimulus from governments boosting the region’s economic growth. Private consumption will also benefit from a boost in confidence, as consumers are expected to dip into their accumulated savings, bolstered in part by cash transfers and large-scale subsidies to households.
“Immunization programs and their deployment continue to drive economic growth and recovery progress in the region,” said Dr Denis Hew, director of the Policy Support Unit at APEC.
“We still see a disparity in access to immunization coverage within APEC; economies with faster deployments and sustained budget support will recover faster and stronger, while economies that have difficulty accessing vaccines and have limited fiscal space will take longer to recover due to these uncertainties, ”explained Dr Hew.
Vaccination coverage within APEC is significantly diversified, ranging from 148 doses per 100 inhabitants to a minimum of one dose per 100 inhabitants. As a result, the rate of fully immunized people across economies varies widely, ranging from as low as 0.2% to 72% of the population in mid-August.
“The race to vaccinate as many people as possible as quickly as possible is extremely crucial,” said Rhea C. Hernando, researcher with the APEC Policy Support Unit who updated the report. “Economies cannot afford to continue imposing restrictions, closing borders and providing broad fiscal and monetary support indefinitely. “
Hernando explained that multilateral cooperation is essential to facilitate the free flow of vaccine components and related supplies, as this will significantly contribute to the accessibility and affordability of vaccines, especially for low-income economies and intermediate.
“It is now clear that for the economic recovery to be more solid, health must be preserved, which in turn requires access to vaccines to protect as many people as possible, as quickly as possible,” he said. she adds.
In terms of trade, the region recorded a positive performance in the first quarter of 2021, with the value of merchandise exports and imports increasing at a higher rate of 16.8% and 16.2%, respectively, after a contraction of 6 , 1% for exports and 4.1% for imports. at the same time last year. This improvement in performance was mainly driven by pharmaceuticals and office and communication equipment, while the food, clothing, metals and minerals sectors also contributed to the boom in trade.
The unwavering impact of COVID-19 on the transportation and travel sectors continues to hamper the performance of APEC’s commercial services. For the period January to March 2021, commercial services fell further to 12% for exports and 15.2% for imports, compared to a drop of 9.5% for exports and 9.2% for imports. for the same period in 2020.
The updated report also notes an increase in inflation in the first half of 2021 to 2.3%, from 1.6% in the first half of 2020, due to the gradual normalization of prices. Inflation is expected to return to pre-pandemic levels around the world once prices take into account supply disruptions related to the pandemic.
The inflation forecast for the full year for the APEC region is 2%, while it could increase to 2.2% in 2022. There is a risk that the upward trend of inflation persists, as consumer activity strengthens after successive quarters of pent-up demand. The report notes that price pressures require continued monitoring and clear communication from monetary policy authorities to guide inflation expectations.
“Solving the current health crisis, mainly through rapid deployment of vaccination, even if appropriate health measures continue to be observed, remains essential to strengthen the economic recovery,” concluded Hernando. “When people feel secure, they are more confident to go out, work and spend the accumulated savings as companies could resume their investing activities, supporting a gradual but uninterrupted economic reopening towards a stronger recovery.”