oppn parties Trade And FDI: Asia-Pacific Pips The Rest Of The World In 2020

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  • Batteries, chains and screws were among 65 objects found in the stomach of a 14-year-old Hathras boy who died after these objects were removed in a complex surgery at Delhi's Safdarjung Hospital
  • India confirms that 'verification patrolling' is on at Demchok and Depsang in Ladakh after disengagement of troops
  • LeT commander and 2 other terrorists killed in Srinagar in a gunbattle with security forces. 4 security personnel injured too.
  • Man arrested in Nagpur for sending hoax emails to the PMO in order to get his book published
  • Adani Power sets a deadline of November 7 for Bangladesh to clear its dues, failing which the company will stop supplying power to the nation
  • Shubman Gill (90) and Rishabh Pant (60) ensure India get a lead in the final Test after which Ashwin and Jadeja reduce the visitors to 171 for 9 in the second innings
  • Final Test versus New Zealand: Match evenly poised as NZ are 143 ahead with 1 wicket in hand
  • PM Modi said that a historic Diwali will be celebrated in Ayodhya after 500 years with the rebuilding of the Ram Mandir there
  • Priyanka Gandhi, campaigning as the candidate in Wayanad, alleged that the BJP had neglected the constituency
  • UP Police arrested 7 people for selling firearms on WhatsApp, Instagram and Facebook
  • The Election Commission once again slammed the Congress for 'frivolous doubts' on the Haryana election process
  • Government has advised pharma companies to cut prices of cancer drugs as the customes duty has been slashed
  • Bengal tweaks PMAY scheme to make it 'better' than the Central offer
  • PM Modi slams Delhi and Bengal for not rolling out Ayushman Bharat in their states. TMC rebuts the charges and says the Bengal Swasthya Sathi scheme is better than the Central scheme
  • iPhone exports from India surged 33% in the period April to September this year
PM Modi 'strongly condemns' on Hindu temple in Canada while MEA expresses concern over safety of Indians
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Trade And FDI: Asia-Pacific Pips The Rest Of The World In 2020

By Jose Kalathil
First publised on 2020-12-23 14:42:29

About the Author

Sunil Garodia Jose Kalathil is a senior journalist based in New Delhi

The emergence of the COVID-19 pandemic, coupled with increasing trade tensions and an already slowing global economy, have paved the way for the world's worst economic performance since the Great Depression. According to the new Asia-Pacific Trade and Investment Trends briefs issued by the Bangkok-based United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) today, global international trade value is estimated to dip by 14.5 per cent in 2020.

Despite facing a sharp decline in trade, Asia and the Pacific is expected to perform better than the rest of the world during 2020. 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.

ESCAP however warns that the path towards full trade recovery remains highly uncertain. 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. These downside pressures signal a potential sluggish recovery in 2021.

 "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," said United Nations Under-Secretary-General and Executive Secretary of ESCAP Ms. Armida Salsiah Alisjahbana. "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."

 COVID-19 has also had an immediate and severe effect on foreign direct investment (FDI). While data is still being collected on all forms of FDI, quarterly figures from announced greenfield investments clearly demonstrate how hard the region has been hit. In the first three quarters of 2020, greenfield 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.

FDI is expected to remain below pre-crisis levels throughout 2021. The outlook beyond 2021 is highly uncertain and dependent on the duration of the crisis, the effectiveness of policy interventions to stimulate FDI and navigate the socio-economic effects of the pandemic, as well as geo-economic tensions. 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.

The trade briefs also highlight that over the medium-to-longer term, two main trends will affect trade - global value chain (GVC) restructuring and the digitalization of the global economy. These trends are likely to cause significant structural shifts, both across and within economies. To address these challenges, ESCAP underscores the necessity of complementary policies on social protection and education as well as in other areas covering new issues such as data protection and privacy, cybersecurity, e-commerce and other electronic transaction tax. This will be vital to allowing Asia-Pacific economies to fully capture the benefits from inclusive and sustainable digital trade and digital FDI growth.              

Looking at trade growth across sub-regions, South and South-West Asia will be the worst performing sub-region of all, with its export and import values forecast to dip 21.6% and 21.4%, respectively, during 2020. The sub-regions' performance was mostly affected by export contraction in Turkey (26.6%) and the Islamic Republic of Iran (42.2%) as well as by large import dips in India (23.6%), Turkey (19.6%) and Bangladesh (21.3%).   

Among the top contributors to Asia and the Pacific export and import falls in 2020, the Russian Federation, Singapore, Japan, the Republic of Korea and Hong Kong, China, accounted for more than half of the region’s export value decline. Likewise, India, Singapore, Japan, the Republic of Korea, Hong Kong, China did the same in terms of Asia and the Pacific import contraction.

The four new Asia-Pacific Trade and Investment Trends briefs are part of an annual series produced by ESCAP to support policymakers develop short-to-medium term plans to mitigate adverse impacts from emerging risks and uncertainties in the global and regional economies. They also aim to maximize the potential of trade and FDI to contribute to sustainable development in an uncertain and changing trade and investment environment.