Hit by the Covid-19 outbreak, economic growth in Asia-Pacific may suffer a record decline this year.
The Asia-Pacific Economic Cooperation (Apec) expects the region's real gross domestic product growth to decline by 2.7 per cent, with trade tensions and lower commodity prices reinforcing the pandemic-driven slump.
The contraction would amount to an output loss of US$2.1 trillion (S$2.98 trillion) and an additional 23 million unemployed workers across the region.
The grim forecast was presented in the latest Apec Regional Trends Analysis report prepared by the Policy Support Unit.
Apec is a 21-nation economic forum established in 1989 to leverage the growing interdependence of the region's economies. Apec members together account for about 40 per cent of the world's population and 60 per cent of global GDP.
The report, delivered to the Virtual Extraordinary Senior Officials' Meeting yesterday, shows the region's growth was already slowing, falling to 3.6 per cent last year from to 4.2 per cent in 2018.
Last year's slowdown was accompanied by a substantial decline in merchandise trade volume and value in the Apec region due to the implementation of various trade curbs.
"Persistent uncertainty is testing our resilience," said Dr Denis Hew, director of the Policy Support Unit, at a virtual press briefing yesterday. "The severity and uncertainty as to the duration of the Covid-19 pandemic further aggravate the ongoing challenges."
However, in contrast to the merchandise trade numbers, the region's services sector remained positive last year, aided, among others, by the increasing demand for digital technology services and automated services solutions.
Apec foresees a global economic rebound next year, with the region growing by 6.3 per cent.
The report noted that economic activity has been on a near standstill so far this year, amid stringent measures to contain the pandemic.
Apec members have responded with fiscal and monetary support as well as stimulus packages.
The report stressed regional cooperation will be crucial and should be sustained and strengthened to ensure resilience and the revival of regional growth going forward.
Members should come together to exchange information, keep open the supply chains for medical and food products, and coordinate policy responses, it recommended.
These policy responses can ensure the free flow of medical goods and food, improved access to and capacity of health systems, support for business and trade activities and a decisive move towards digitalisation to catalyse economic activities.
Dr Rebecca Sta Maria, Apec Secretariat's executive director, said: "Closer ties and cooperation between members are vital for ensuring the availability of credible and updated information to help policymakers around the region develop appropriate policy responses at an exceptional scale."
The pandemic has wide-ranging repercussions, from personal to global, with great costs to lives and livelihoods.
Businesses, particularly micro, and small and medium-sized enterprises, are facing immense challenges, not least of which are possible closures due to supply chain disruptions and plunging customer demand.
The report cited a survey by the Institute for Supply Management in March, in which almost 75 per cent of companies surveyed reported some form of supply chain disruption due to pandemic-related restrictions in transportation, with one in six companies downgrading their revenue targets for the year.
Apec economies have exempted cargo and trade-related transport from border controls. However, restrictions in the movement of vehicles, coupled with the introduction of alternative routes, have intensified logistical bottlenecks, adding another layer of difficulty in the trading environment, weakening trade activity and affecting both exporters and importers.
At the briefing, Apec officials said some members were working to develop a pandemic policy toolkit that would provide options and planning guidance amid a health emergency, and bring resilience to the region's supply chains.
The kit will include tools such as supply chain mapping, and inventory planning and management.
Trust and cooperation among Apec economies will help reconnect supply chains and find more innovative ways to do business and trade, said Dr Hew.
The officials said members were already working on resuming essential travel to facilitate global supply chain management.
Dr Sta Maria said the Apec ministers meeting next month is likely to go ahead.