The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) trade briefs revealed today that the United States-China trade tensions have been adversely impacting the trade growth in the Asia-Pacific region but hopes are that these economies may strengthen their trade in 2020.
There was a shrinkage in the trade in the Asia-Pacific region in 2019. The region hadn’t witnessed a decline in its value for trade since the global economic crisis in 2009, up till now. There was a 2.5% fall in the net export volume while the decrease in the import volume was 3.5%. There was a huge downfall in the export volume of China, Japan, Hong Kong, and Singapore as well as oil-exporting countries of the Islamic Republic of Iran and Indonesia.
The increased trade tensions and the global downfall in the economic growth in 2018-19 caused the region’s merchandise trade to face a strong headwind. Trade and especially those economies that are closely amalgamated with China through GVCs, the Global Value Chains, were adversely affected because of these tensions. It is becoming harder to integrate smaller businesses with the regional and global economy through GVCs. The price of production has been increased by the new import barriers while the competition among companies taking part in regional production chains has been reduced.
According to an earlier estimate by ESCAP, the tax toll on GDP could increase as high as $400 billion globally and $117 billion in the Asia-Pacific region. These estimates can reach even higher scales if the trade tensions are not reduced on time.
Armida Salsiah Alisjahbana, the Executive Secretary of ESCAP and United Nations Under-Secretary-General said that it is a challenge for the Asia-Pacific to extend their trade and strengthen economic integration to contribute to sustainable development. She also welcomed the agreement made between China and the US and said that it should minimize policy uncertainty. Moreover, Armida emphasized on how important a multilateral trading system is for the growth of trade in the future.