The Asia Pacific Economic Cooperation (APEC) region posted a 6.1% increase in economic growth in the first quarter (Q1) of 2021, bouncing back strongly from a 2% decline in Q1 2020.
According to an updated report by the APEC Policy Support Unit, the number comfortably put the region on track to achieve growth expectations for the year, which was now estimated at 6.4%, slightly higher than the earlier prediction.
“High growth in the Q1 2021 is due to a combination of factors, including the low comparison point following substantial economic contraction a year ago as well as higher government spending given the sustained impact of the pandemic on economic activities, while domestic consumption grew considerably during this period,” it said.
In the near term, the APEC Policy Support Unit still sees sustained stimulus measures from governments driving the region’s economic growth.
“Vaccination programmes and rollout still drive economic growth and the recovery progress in the region.
“We are still seeing a disparity in access to vaccination coverage across APEC; economies with faster rollouts and sustained fiscal support will recover faster and stronger, while economies that struggle with vaccine access and have limited fiscal space will take more time to recover due to these uncertainties,” the unit’s director Dr Denis Hew said.
Hew said vaccination coverage across APEC was noticeably diverse, ranging from 148 doses per 100 residents to a low of only one dose per 100 residents.
As a result, the rate of fully vaccinated people across economies varies greatly, from as low as 0.2% to as high as 72% of the population as of mid – August.
The updated report also noted an increase in inflation during the first half (1H) of 2021 to 2.3%, compared to 1.6% in the 1H 2020, due to the gradual normalisation of prices.
“Inflation is expected to revert to its pre – pandemic levels globally once prices factor in pandemic related supply – side disruptions,” it said.
The whole – year forecast of inflation for the APEC region is two per cent while it could increase to 2.2% in 2022.
“There is a risk that the upward trend in inflation could persist as consumption activity strengthens following successive quarters of pent – up demand.
“The report notes that price pressures require continued monitoring and clear communication from monetary policy authorities to guide inflation expectations,” it added.
- The New Straits Times