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APEC Regional Trends Analysis, May 2022: Tackling Trade Costs and Facilitating Supply Chain Networks; Sustainable Recovery amid Uncertainty

Cover_222_PSU_ARTA-May 2022
Published Date May 2022
Type of Publication Reports
Publication Under APEC Secretariat, APEC Policy Support Unit
Accessed 471
Pages 41
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Description

Trade costs are a key determinant of trade patterns and trade networks. Overall trade costs remain high but have been on a downward trend despite upticks during times of economic crisis. Meanwhile, differences in trade costs help determine trade centralisation: economies with relatively lower trade costs tend to have central hub roles in global trade networks. While the concentration of trade around central hubs could be efficient, it could also lead to supply chain fragility and pass inflationary pressures along the network. The ARTA May 2022 theme chapter analyses these issues and discusses policy options to reduce trade costs and improve the resiliency of supply chain networks.

The next chapter on economic and trade trends shows the fragile recovery of the APEC region’s economy. APEC GDP is expected to slow to 3.2 percent in 2022 after growing by 5.9 percent in 2021. Meanwhile, average inflation in the region doubled in 2022 to 3.0 percent compared to 1.5 percent in 2021. Economic recovery, which was already fragile to begin with, faltered toward the second half of 2021 with the emergence of the highly contagious Omicron variant, while rising inflation, particularly of food prices, could push more people into extreme poverty. Amid heightened uncertainty and rising risks from crisis upon crisis, the challenge for APEC is to translate the Putrajaya 2040 vision of an ‘open, dynamic, resilient and peaceful Asia-Pacific’ into concrete actions and tangible benefits for all people.