 |
| People sell fruit and other agricultural products on boats at a floating market in Ratchaburi Province, Thailand. The country is a member of the U.N. Economic and Social Commission for Asia and the Pacific (ESCAP). / Gettyimagsbank |
By Yi Whan-woo
The Asia-Pacific region will see its trade volume rebound by 5.8 percent in 2021 from 2020, according to U.N. Economic and Social Commission for Asia and the Pacific (ESCAP).
It warned, however, that there is no guarantee the trade sector will fully recover to pre-COVID-19 levels.
It also warned that foreign direct investment (FDI) is likely to "remain below pre-crisis levels throughout 2021."
These outlooks altogether signal a potential sluggish recovery this year, ESCAP said.
"Macroeconomic conditions remain unfavorable for many Asia-Pacific economies with high unemployment rates, deflation, indebtedness and geopolitical tensions among the structural factors hindering the recovery of countries," ESCAP said in a statement released last week.
It said small economies in the region may be especially 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," ESCAP noted.
Regarding FDI, it said COVID-19 has had immediate and severe effects. It pointed out that greenfield FDI in the first three quarters of 2020 dropped by 40 percent compared to the same period in 2019.
It analyzed lockdowns, such as closure of businesses, manufacturing plants and construction sites, led to delayed and canceled projects.
"The outlook beyond 2021 is highly uncertain," ESCAP said, adding the outlook will depend on the duration of the crisis, and the effectiveness of policy interventions to stimulate FDI and navigate the socio-economic effects of the pandemic, as well as geo-economic tensions.
U.N. Under-Secretary-General and ESCAP Executive Secretary Armida Salsiah Alisjahbana assessed 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," she said. "I urge countries in the region to work toward developing a better set of trade rules that are resilient in times of crisis and stimulate sustainable economic recovery for inclusive and greener economies."
Meanwhile, ESCAP speculated the recent signing of the Regional Comprehensive Economic Partnership (RCEP) may help FDI bounce back, especially for smaller and less-developed countries.
ESCAP serves as the United Nations' regional hub promoting cooperation among countries to achieve inclusive and sustainable development. It has 53 member states including Korea.
The commission focuses on the 2030 Agenda for Sustainable Development, which is reinforced and deepened by promoting regional cooperation and integration to advance responses to shared vulnerabilities, connectivity, financial cooperation and market integration.
