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Trade and investment growth slow in Asia-Pacific due to over dependence on foreign export demand, says new UN reportFriday, September 26, 2014 > 10:36:48
Trade and investment growth slow in Asia-Pacific due to over dependence on foreign export demand, says UN report.
While the Asia-Pacific region remains the most dynamic pole of the global economy, growth in trade and investment flows is yet to return to its levels of strength prior to the global financial crisis, a new United Nations report released here today said.
According to the Asia-Pacific Trade and Investment Report (APTIR) 2014 published by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), total exports and imports from the region grew by only 2 per cent in 2013 and were weak in the first half of 2014. Growth in 2015 is expected to increase to 7 per cent, but considerable uncertainties in global macro-economic prospects mean this is far from assured.
"The overarching message of this year's report is that the lengthy shadows cast by the crisis highlight the need for economic rebalancing said Dr.
Shamshad Akhtar, United Nations Under-Secretary-General and ESCAP Executive Secretary. In part, this requires refocusing on domestic value addition of exports, rather than increasing gross exports alone.
Regional economies also need to diversify away from dependence on traditional sources of export-demand in Europe and the United States, developing domestic demand and better integrating with other regional economies,added Dr. Akhtar. In this context, it is encouraging that APTIR 2014 shows consolidated intraregional trade, with more than half of regional exports now directed to other Asia-Pacific countries.
Patterns of global trade are changing and national policies must adapt,according to ESCAP. The report reveals production is increasingly fragmented across national borders as part of global value chains. To succeed in this globalized world, countries will need to enhance competitiveness and find areas where they can best integrate in these value chains, pointed out Dr. Ravi Ratnayake, Director, ESCAP Trade and Investment Division.
Concentrations of exports and imports remain uneven across the region Amongst the report's findings, North East Asia alone was responsible for about 60 per cent of both total regional merchandise exports and imports in 2013. Similarly, 65 per cent of all services exports from the Asia-Pacific region are attributable to just six economies: China, India, Japan, the Republic of Korea, Singapore and Hong Kong, China. This suggests that large gaps remain between countries in terms of their trade competitiveness andlevel of diversification, and that great potential remains still untapped, especially in the services sectors of many countries.
The report also revealed that growth in commercial services exports from the Asia-Pacific region at 5.2 per cent lagged behind the world total of 5.5 per cent in 2013. Asia-Pacific attracted $549 billion of foreign direct investment (FDI) in 2013; a rise of 6.6 per cent, accounting for almost 38
per cent of global inflows, yet this was still lower than the global increase and lagged behind other fast-growing regions such as Latin America.
On a more positive note, the report indicates a noticeable diversification in the destination of FDI within the region - with new locations and smaller players now attracting more foreign investors, and on a larger scale.
Intraregional FDI is also found to be expanding in importance, with inflows through mergers and acquisitions totalling more than $153 billion, accounting for almost one third of total regional FDI inflows last year, and also flowing to a diverse range of destinations. According to ESCAP, given the importance of foreign investment in transferring technology and generating jobs, this is a promising development and augurs well for deepening global value chains, stimulating higher returns and generating decent jobs.
APTIR 2014 underscores the importance of countries remaining open to imports, and not resorting to unnecessarily trade-restrictive measures. The report traces a worrying trend of increasingly restrictive measures across the region, dominated by behind-the-border non-tariff measures, many of which have had unintended and detrimental consequences for the region's least developed countries, presenting particular obstacles to small and medium sized exporters.
Asia and the Pacific must lead the way in fostering multilateralism to ensure that trade supports sustainable development and helps to deliver the future of inclusive and sustainable growth we want, said Dr. Akhtar.
The data and analysis in this 2014 Asia-Pacific Trade and Investment Report are valuable inputs to the work being done to mainstream trade considerations in the post-2015 development agenda.
The Asia-Pacific Trade and Investment Report (APTIR) is a recurrent publication prepared by the Trade and Investment Division of the United Nations Economic and Social Commission for Asia and the Pacific. It provides information on and independent analyses of trends and developments in: (a) intra- and inter-regional trade in goods and services; (b) foreign direct investment; (c) trade facilitation measures; (d) trade policy measures; and (e) preferential trade policies and agreements. The report provides insights into the impacts of these recent and emerging developments on countries abilities to meet the challenges of achieving inclusive and sustainable development.
A full copy of the 2014 Asia-Pacific Trade and Investment Report is available at:http://www.unescap.org/resources/asia-pacific-trade-and-investment-report-2014-recent-trends-and-developments.