SLOWER growth is forecast for the Philippines and other economies in the Asia Pacific through next year, but this course can be reversed by building a more innovative services sector to revive the pace of regional expansion, according to a new Asia-Pacific Economic Cooperation (Apec) report.
The latest Apec Economic Trends Analysis: Building a Dynamic and Innovative Services Economy as an Engine for Growth noted the region’s unexpectedly slower growth in the first half of 2014, its gross domestic product (GDP) expanding by about 3.9 percent, down from 4.3 percent in the second half of last year.
“Subdued trading activity was one of the factors affecting Apec economic performance,” the report said. Apec merchandise trade expanded moderately at 1.2 percent in the first half this year, a marked reduction from the double-digit rate seen in 2007.
Apec growth for the whole of 2014 is now seen at 3.9 percent, a touch lower than the 4 percent achieved last year, while output is forecast to accelerate at 4.3 percent in 2015. For the Philippines, the report calculates her economic growth at 6.2 percent in 2014 and 6.3 percent in 2015, both down 0.2 percent from earlier projections.
As for the other economies in Southeast Asia, Brunei Darussalam’s GDP growth rate is estimated at 5.3 percent in 2014 (down 0.1 percent from previous forecasts) and 3 percent in 2015 (unchanged); Indonesia 5.2 percent in 2014 (down 0.2) and 5.5 percent (down 0.3 percent); Malaysia 5.9 percent in 2014 (up 0.7 percent) and 5.2 percent in 2015 (up 0.2 percent); and Singapore both 3 percent for 2014 and 2015 (down 0.7 percent and 0.6 percent, respectively). Thailand, meanwhile, has a projected expansion of 1 percent in 2014 (down 1.5 percent) and 4.6 percent in 2015 (up 0.8 percent); and Vietnam 5.5 percent in 2014 and 5.6 percent in 2015 (both down 0.1 percent).
However, Apec can build on its strengths to stimulate future growth, particularly by harnessing the region’s dynamic services sector, noted the paper. “The services sector has been outperforming all other sectors and can be further leveraged to provide higher-income jobs for the Asia Pacific,” it said.
Of the three main sectors of the Apec economy-agriculture, industry, and services-services recorded the highest average annual growth rate between 1989 and 2009. During this period, Apec output grew by 83 percent, of which 60 percentage points can be attributed to the expanding services sector.
“There is now more pronounced interaction between services and other sectors in the economy with manufacturers increasingly using services to differentiate their products and to improve production efficiency,” the report said.