State of the Region 2016-2017

The Asia-Pacific is forecast to grow by 3.4 percent in 2016, much the same rate as in 2015 and this is expected to continue into 2017.

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State of the Region Report 2016-2017

Content:

i Message from the Co-Chairs of PECC

ii Executive Summary

Chapter 1: The Macroeconomic Outlook
CONTRIBUTED BY MR. EDUARDO PEDROSA, SECRETARY GENERAL OF PECC / COORDINATOR OF STATE OF THE REGION

• • Figure 1.1: Asia-Pacific GDP Growth
  • Figure 1.2: Asia-Pacific CPI Growth
• CONCERNS OVER DEFLATION
• HISTORICALLY HIGH DEBT LEVELS
  • Figure 1.3: Gross Government Debt
  • Figure 1.4: Change in Gross Government Debt as a Percentage of GDP, 2007-2015
• PRODUCTIVITY GROWTH MISSING
  • Figure 1.5: Contribution of Total Factor Productivity to Regional Growth
• INCOME GROWTH
  • Figure 1.6: GDP Per Capita Levels
  • Figure 1.7: GDP Per Capita Growth
• BOX 1.1 CHINA’S ECONOMY WILL REMAIN STABLE AND SOUND
• WHERE IS GROWTH COMING FROM?
  • Figure 1.8: Structure of the Asia-Pacific Economy (2014)
  • Figure 1.9: Drivers of Growth 2010-2014
• SLOWING TRADE GROWTH
  • Figure 1.10: Asia-Pacific Export Growth
  • Figure 1.11: Asia-Pacific Import Growth
  • Figure 1.12: Trade Growth in the Asia-Pacific
• UNEMPLOYMENT LEVELS
  • Figure 1.13: Asia-Pacific Unemployment
• Box 1.2: US ECONOMY: STILL SEARCHING FOR MOMENTUM
• IMPACT OF BREXIT ON THE ASIA-PACIFIC
  • Figure 1.14: Asia-Pacific Exports to the European Union
  • Figure 1.15: Asia-Pacific Exports to the UK as a Percentage of GDP
• ENGINES FOR GROWTH
  • Figure 1.16: Change in General Government Expenditure as a Percentage of GDP (2007 to 2015)
  • Figure 1.17: Change in Total Investment as a Percentage of GDP (2007 to 2015)
  • Figure 1.18: Growth in Investment in the Asia-Pacific (year-on-year)
  • Figure 1.19: Cash and Cash Equivalents on the Corporate Balance Sheet)
• Box 1.3: CHALLENGES FOR JAPAN`S ECONOMIC POLICIES
• • Figure 1.20: Asia-Pacific Current Account Balances
  • Figure 1.21: Number of Protectionist Measures Adopted and Implemented by Asia-Pacific Economies
• CURRENT ACCOUNT
• SOUTHEAST ASIA
• PACIFIC SOUTH AMERICA
• THE RISING SCEPTER OF PROTECTIONISM
• Box 1.4: PACIFIC ALLIANCE: MEETING EXPECTATIONS
• INTEGRATION AND INEQUALITY

Chapter 2: Benefits of services trade liberalization in the Asia-pacific
CONTRIBUTED BY DR. SHERRY M. STEPHENSON, SENIOR FELLOW, INTERNATIONAL CENTRE FOR TRADE AND SUSTAINABLE DEVELOPMENT (ICTSD) / PECC SERVICES NETWORK

• SERVICES ARE OF CRITICAL IMPORTANCE TO THE ASIA-PACIFIC REGION
  • Figure 2.1: Evolution of Share of Services in GDP in Selected Asia-Pacific Economies
  • Figure 2.2: Service Sector Employs Largest Number of Workers in APEC Economies
  • Figure 2.3: Industry Contribution to Growth in Business Sector Labor Productivity
  • Figure 2.4: Global Innovation Index: Factors contributing to innovation Business Sophistication Human Capital
  • Figure 2.5: Share of Value Added in APEC Manufacturing Exports (1995 & 2009)
  • Figure 2.6: Services Employment Promotes Female Participation and Inclusivity
  • Figure 2.7: Services Now Generate the Highest Value-Added (VA) in International Trade Flows (2011)
  • Figure 2.8: Positive Relationship between Telecom Reform and Access to the Internet
• SERVICES ARE NOW RECEIVING MORE POLICY ATTENTION IN THE ASIA-PACIFIC
• SERVICES ARE STILL HIGHLY RESTRICTED IN THE ASIA-PACIFIC
  • Figure 2.9: Views on Services as a Top Trade Issue for APEC
  • Table 2.1 Comparisons of the OECD and World Bank STRI Databases
  • Figure 2.10: Average Level of Restrictiveness of Services Regulations in Asia-Pacific by Sector and Type of Restrictive Policy Based on OECD STRI
  • Figure 2.11: Comparing the World Bank and OECD STRI Indices for Services Restrictions by Sector for APEC Economies
  • Figure 2.12: Equity Restrictions on Services Compared with Overall Restrictiveness of FDI for Selected APEC Economies (2014)
  • Figure 2.13: Negative Impact on Services Trade of Restrictions on FDI
• SERVICES LIBERALIZATION AND REFORM WOULD PROVIDE TREMENDOUS BENEFITS TO ASIA-PACIFIC ECONOMIES
• BOX 2.1 BENEFITS DERIVING FROM SERVICES LIBERALIZATION
• UNTAPPED POTENTIAL FOR SERVICES CONTRIBUTION IN THE ASIA-PACIFIC
  • Figure 2.14: APEC Services Value Added in Exports below World Average
  • Table 2.2 Indicators Evaluating the Engagement in Services by APEC Economies
• GAINS TO BE DERIVED FROM SERVICES LIBERALIZATION AND REFORM
• BOX 2.2 POLICY RECOMMENDATIONS TO IMPROVE COMPETITION BY SECTOR
• • Figure 2.15: Weighted Average Productivity Improvements from Structural Reforms in Transport, Energy and Telecommunications for APEC Economies (in percentages)
• BOX 2.3 SUCCESS STORIES IN APEC AS A RESULT OF ENHANCING COMPETITION IN SERVICES
• • Figure 2.16: Welfare Gains from Structural Reforms in Services Relative to Initial Economic Size for APEC Economies (in percentages)
  • Figure 2.17: Contribution to Welfare from Own and Others’ Structural Reform in Services for APEC Economies (percentage of total)
• FUTURE CHALLENGES

Chapter 3: Perspectives on regional policy issues
CONTRIBUTED BY MR. EDUARDO PEDROSA, SECRETARY GENERAL OF PECC / COORDINATOR OF STATE OF THE REGION

• • Figure 3.1: Views on Global Growth (2009-2016)
  • Figure 3.2: Views on Major Economies/Region
• OUTLOOK FOR WORLD ECONOMY REMAINS NEGATIVE
• SLOWDOWN IN WORLD TRADE GROWTH NOW A MAJOR RISK
  • Figure 3.3: Risks to Growth
• RISING RISK OF PROTECTIONISM
  • Figure 3.4: Evolution of Protectionism as Risk to Growth 2011-2016
  • Figure 3.5: Protectionism as a Risk to Growth (views by sub-region)
• ATTITUDES TOWARDS TRADE
  • Figure 3.6: Views on the Political Environment for Freer Trade in the Asia-Pacific (by Sub-Region)
  • Figure 3.7: Shifts in Views on the Political Environment for Freer Trade (2015-2016)
• WHAT LIES BEHIND FALTERING SUPPORT FOR TRADE?
  • Figure 3.8: Reasons Behind Attitudes towards Freer Trade and Investment in the Asia-Pacific
  • Figure 3.9: Impact of Rising Income Inequality on Attitudes towards Trade
  • Figure 3.10: Impact of Job Security on Attitudes towards Trade
• VIEWS ON THE BENEFITS OF ECONOMIC INTEGRATION INITIATIVES
  • Figure 3.11: Advanced Economy Views on Trade Initiatives
  • Figure 3.12: Emerging Economy Views on Integration Initiatives
• APEC SHOULD FOCUS TRADE WORK ON ACHIEVING THE FTAAP
  • Figure 3.13: Views on the Economic Impact of the FTAAP (by sub-region)
  • Figure 3.14: APEC should focus its work on trade policy to achieving the FTAAP
  • Figure 3.15: Drivers of Growth
• DRIVERS OF GROWTH
  • Figure 3.16: Key Sectors for Future Growth
• SERVICES SECTOR TO DRIVE GROWTH
• PERCEPTIONS OF THE IMPACT OF SERVICESLIBERALIZATION
  • Figure 3.17: Perceptions of the Impact of Services Liberalization: Quality and Prices
  • Figure 3.18: Perceptions of the Impact of Services Liberalization: Jobs and Corporate Sector
• BARRIERS TO SERVICES
  • Figure 3.19: Barriers to Services Trade
  • Figure 3.20: Seriousness of Barriers to Data Flows (by type and size of business)
• TRANSPARENCY, MULTIPLE LAYERS OF AUTHORITY, AND PREDICTABILITY OF REGULATIONS
• CERTIFICATION AND STANDARDS ISSUES
• TRANSFER OF TECHNOLOGY REQUIREMENTS
• RESTRICTIONS ON DATA FLOWS
• COMPLEX REQUIREMENTS FOR VISAS AND PERMITS FOR FOREIGN EMPLOYEES
• PERCEPTIONS OF APEC CONTINUE TO IMPROVE
  • Figure 3.21 Attitudes toward APEC (2007-2016)
  • Figure 3.22: APEC is as important or more important today compared to 1989 when it was created (by sub-region)
• IS IT TIME FOR APEC TO EXPAND ITS MEMBERSHIP?
  • Figure 3.23: APEC should expand its membership
  • Figure 3.24: APEC is already too large, and a moratorium on new members should be imposed
  • Figure 3.25: Expansion of APEC Membership as a Priority for APEC Leaders
• PRIORITIES FOR APEC LEADERS
  • Figure 3.26: Priorities for APEC Leaders’ Discussions in Lima
  • Figure 3.27: Priorities for Advanced Economies
  • Figure 3.28: Priorities for Emerging Economies
  • Figure 3.29: Priorities for Business
  • Figure 3.30: Priorities for Government

Chapter 4: Index of economic integration in the Asia-Pacific
CONTRIBUTED BY DR. BO CHEN

• • Figure 4.1: Composite Index of Regional Economic Integration
  • Table 4.1: Weights Used
  • Table 4.2: Comparison of 2010 and 2011 Indices
• ASIA-PACIFIC TRADE FLOWS
• FOREIGN DIRECT INVESTMENT
  • Figure 4.2: Intraregional Trade Flows (% of GDP)
  • Figure 4.3: Intraregional Flows of Foreign Direct Investment (%)
  • Figure 4.4: Intraregional Tourist Inflows (% of total)
  • Figure 4.5: Convergence Index
• TOURISM FLOWS
• CONVERGENCE INDEX
  • Figure 4.6: Deviation of GDP Per Capita
• LESS DIVERGING INCOMES
  • Figure 4.7: GDP Per Capita Growth
  • Figure 4.8: Deviation Indicator: Urban Resident Ratio
  • Figure 4.9: Deviation Indicator: Share of Non-agriculture in GDP
  • Figure 4.10: Deviation Indicator: Expenditure on Education as a Proportion of GNI
  • Figure 4.11: Deviation Indicator: Life Expectancy

ANNEX A FOR CHAPTER 1

ANNEX B FOR CHAPTER 2: Results of Asia-Pacific policy community survey

Member Committees