State of the Region 2019-2020

On behalf of the members of the Pacific Economic Cooperation Council (PECC), it is our pleasure to present our fourteenth annual report on the State of the Region. This year we have chosen to focus on the future of APEC. Next year, APEC will reach the milestone of 2020 – the deadline for the Bogor Goals of free and open trade and investment in the Asia-Pacific. In 2016, our Council established a task force to put forward recommendations for what a post-2020 vision for APEC might be.

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State of the Region Report 2019-2020

CONTENT

I MESSAGE FROM THE CO-CHAIRS OF PECC

II EXPLANATION OF TERMS USED IN THE REPORT

III EXECUTIVE SUMMARY

IV CHAPTER 1: ASIA-PACIFIC ECONOMIC OUTLOOK

• Figure 1.1: Expectations for Global Growth
• Figure 1.2: Expectations for Selected Economies / Regions
• Figure 1.3: Asia-Pacific GDP Growth

HOW BAD IS IT?

• Figure 1.4: Expectations for Global Economy by Sub-Region

RISKS TO GROWTH

• Figure 1.5: Risks to Growth
• Figure 1.6: Equities vs Gold
• Figure 1.7: Foreign Exchange Movements over past 24 months
• Figure 1.8: Composition of Foreign Reserves
• Figure 1.9: Foreign Exchange Reserves (months of imports)

IMPACT OF RISING PROTECTIONISM

• Figure 1.10: Risks to Growth: Increased Protectionism
• Figure 1.11: Breakdown of Increased Protectionism by Sub-Region
• Figure 1.12: Top 20 Trade Restricting Measures Adopted by Asia-Pacific Economies since 2008

THE EXTERNAL SECTOR

• Figure 1.13: Export Growth
• Figure 1.14: Import Growth

NEED FOR FORWARD POLICY MOMENTUM

• Figure 1.15: Government Revenue Less Government Expenditure (% of GDP)

LACK OF POLITICAL LEADERSHIP

• Figure 1.16: General government gross debt in the Asia-Pacific     

COMPLEMENTARY MEASURES TO STALLING GROWTH

• Figure 1.17: Non-Financial Capex Growth
• Figure 1.18: Sales of Foreign Affiliates

REVISITING THE APEC GROWTH STRATEGY

• Figure 1.19: Estimated Change in Consumption Expenditure as a Share of GDP 2007-2017
• Figure 1.20: Estimated Change in Government Expenditure as a Share of GDP 2007-2017
• Figure 1.21: Estimated Change in Investment as a Share of GDP 2007-2017
• Figure 1.22: Estimated Change in Net Exports as a Share of GDP 2007-2017
• Figure 1.23: Current Account Balances (as a percent of GDP)

SUSTAINABLE GROWTH

• Figure 1.24: Current Account Balance
• Figure 1.25: Energy Intensity in the Asia Pacific
• Figure 1.26: Sources of Energy Use in the Asia-Pacific

PRIORITIES FOR APEC LEADERS

• Figure 1.27: Climate Change as a Priority for APEC Leader’s Discussions
• Figure 1.28: Priorities for APEC Leaders in Santiago
• Figure 1.29: WTO and the Multilateral Trading System as a Top 5 Priority for APEC Leaders Discussions

V CHAPTER 2: APEC BEYOND 2020: WHAT LIES AHHEAD?

APEC’S STRATEGIC VALUE 

DOES APEC STILL MATTER?

COSTS OF FRAGMENTATION

• Figure 2.1: Scenarios for APEC in 2040

VISION BEYOND TRADE?

• Figure 2.2 What should be the future emphasis for economic cooperation in the region?

ROBUST DIALOGUE CRITICAL FOR APEC

• Figure 2.3: Areas of Focus for APEC

ACHIEVEMENT OF BOGOR GOALS

• Figure 2.4: Sub-Regional Views on Importance of Intensified Efforts to Fully Achieve the Bogor Goals

SUSTAINABILLITY

• Figure 2.5: Is sustainability is the greatest existential challenge facing humanity today?
• Figure 2.6: How might APEC address issues of sustainability in its post-2020 work?
• Figure 2.7: Cross-sectoral and sub-regional views on whether APEC members should commit to mutual review by its members of their individually determined climate change commitments
• Figure 2.8: What can APEC do in support of the WTO and Multilateral Trading System?

SUPPORT FOR THE WTO AND MULTILATERAL TRADING SYSTEM

• Figure 2.9: How important do you think each of the following are for APEC to address in order to promote people-oriented economic growth?

INCLUSION

• Figure 2.10: Secondary Education in the Asia-Pacific
• Figure 2.11: Tertiary Education

TERTIARY EDUCATION 

STRUCTURAL REFORMS

STRUCTURAL REFORMS AND THE TRADE AGENDA

• Figure 2.12: Priority Structural Reforms for Future Growth
• Figure 2.13: Structural reform for progressing liberalization, facilitation and expansion of agricultural trade
• Figure 2.14: Structural reform for progressing liberalization, facilitation and expansion of services

BOX 1  - INTERVIEW WITH ANTHONY VIEL, CEO FOR DELOITTE CANADA AND CHILE, AND RICARDO BRIGGS, REGIONAL MANAGING PARTNER FOR DELOITTE CHILE

TOWARDS A UNIFIELD ASIA- PACIFIC DIGITAL MARKET

• Figure 2.15: Should APEC Set a Goal of a Unified Asia-Pacific Digital Market?
• Figure 2.16: Digital Economy Issues for the Asia-Pacific

CROSS BORDER DATA FLOWS AND PRIVACY PROTECTION

• Figure 2.17: APEC needs to build more momentum to ensure the freedom of cross-border data flows
• Figure 2.18: APEC should work to develop a common approach for the protection of privacy

PATHWAYS TO A FREE TRADE AREA OF THE ASIA - PACIFIC

• Figure 2.19: APEC should develop common priorities and responses by members on critical issues associated with related technologies such as artificial intelligence (AI), robotics, block-chain, and quantum computing, as well as other path-breaking technologies
• Figure 2.20: How to achieve the FTAAP
• Figure 2.21: The completion of the ongoing RCEP negotiations and its expansion to include all APEC members
• Figure 2.22: Expanding the membership of the CPTPP to include all APEC members

PRIORITY ISSUES FOR THE ASIA - PACIFIC TRADE AGREEMENTS

MEETING THE BOGOR GOALS

• Figure 2.23: What should be the priority issues for Asia-Pacific free trade agreements and an eventual Free Trade Area of the Asia-Pacific?
• Figure 2.24: Have APEC Industrialized Members met the Bogor Goals?
• Figure 2.25: Have APEC Developing Members met the Bogor Goals?
• Figure 2.26: Perceptions of APEC Over Time

BOX 2 - NEXT GENERATION VIEWS ON APEC BEYOND 2020

CONCLUSION

VI CHAPTER 3: INDEX OF CONNECTIVITY IN THE ASIA-PACIFIC

• Figure 3.1: Conceptual Framework

CONNECTIVITY INDEX RESULTS

• Figure 3.2: Connectivity in the Asia-Pacific
• Figure 3.3: Connectivity and Income per Capita
• Table 3.1: Income Group Definitions

PHYSICAL CONNECTIVITY

• Table 3.2: Components of the Physical Connectivity Pillar
• Figure 3.4: Physical Connectivity and GNI per capita
• Figure 3.5: Physical Connectivity in the Asia-Pacific: High Income Economies
• Figure 3.6: Physical Connectivity in the Asia-Pacific: Upper Middle Income Economies
• Figure 3.7: Physical Connectivity in the Asia-Pacific: Lower Middle-Income Economies

INSTITUTIONAL CONNECTIVITY 

• Table 3.3: Components of the Institutional Connectivity Pillar
• Figure 3.8: Institutional Connectivity and GNI per capita
• Figure 3.9: Institutional Connectivity in the Asia-Pacific: High Income Economies
• Figure 3.10: Institutional Connectivity in the Asia-Pacific: Upper Middle Income Economies
• Figure 3.11: Institutional Connectivity in the Asia-Pacific: Lower Middle-Income Economies

PEOPLE TO PEOPLE

• Table 3.4: Components of the People-to-People Pillar
• Figure 3.12: People-to-People Connectivity and GNI per capita
• Figure 3.13: People-to-People Connectivity in the Asia-Pacific: High Income Economies
• Figure 3.14: People-to-People Connectivity in the Asia-Pacific: Upper Middle Income Economies
• Figure 3.15: People-to-People Connectivity in the Asia-Pacific: Lower Middle Income Economies

CONCLUSIONS

• Annex 1: PECC Connectivity Index Results
• Table: Physical
• Table: Institutional
• Table: People-to-People Pillar
• Table: Physical connectivity   
• Table: Institutional connectivity   
• Table: People to people connectivity

VII ANNEX A

• Table 1: GDP Growth (year-on-year %)
• Table 2: Table 2: CPI Inflation (year-on-year %)
• Table 3: Growth of Exports of Goods and Services (year-on-year %)
• Table 4: Growth of Imports of Goods and Services (year-on-year %)
• Table 5: Current Account Balance (% of GDP)
• Table 6: Table 6: GDP & CPI Weights (% of total)
• Table 7: Trade Weight (% of total)

VIII ANNEX B: RESULTS OF ASIA-PACIFIC POLICY COMMUNITY SURVEY

GOVERNMENT

BUSINESS

NON-GOVERNMENT: RESEARCH COMMUNITY/CIVIL SOCIETY/MEDIA

RESPONDENT BREAKDOWN

BREAKDOWN OF RESPONDENTS BY SECTOR

BREAKDOWN OF RESPONDENTS BY SUB-REGION

IX MEMBER COMMITTEES