In the last few years, businesses across the world have become increasingly reliant on the Asia-Pacific region as a key driver of growth, due to the rapid economic expansion the area has seen during recent times.
With the economies of many Asian nations showing robust growth, led by the powerhouse performance of China, companies have invested extensively in broadening their trade links to the region, thus creating a self-sustaining growth cycle.
However, this expansion has decelerated in more recent times, leaving the economies of the Asia-Pacific region at a crossroads. As such, the Asia-Pacific Economic Cooperation (APEC) forum recently met to discuss potential strategies and objectives to kickstart local business performance and ensure that the crucial role that Asian businesses have played in global trading is not surrendered.
The current state of play
According to figures reported by the APEC Policy Support Unit, the economies of the Asia-Pacific region are still growing at present, but momentum is slowing due to a recent slowdown on global trade.
Growth among the 21 APEC member economies softened to 3.1 per cent in the second quarter of 2015, down from 3.2 per cent in Q1 and 3.4 per cent for the corresponding period of 2014.
Similarly, foreign direct investment inflow to APEC economies dropped 22.1 per cent to $651.8 billion (£432.98 billion) in 2014, down from $836.9 billion the previous year, while outgoing spending from the region increased by 5.1 per cent in 2014, slower than the 7.5 per cent pace recorded in 2013.
Goods exports are expected to rise 2.3 per cent for the full year, rising to 3.3 per cent in 2016 as global demand rebounds, but this will still be more than a percentage point below 2014 levels. Overall, the region's economic performance will moderate in 2015, growing by 3.1 per cent, before recovering in 2016 with growth of 3.4 per cent.
Dr Alan Bollard, executive director of the APEC Secretariat, said: "The fact is that economies in the region are still highly trade-dependent and opportunities to grow are very much out there, but there is a recognition in APEC that traditional approaches are not enough. When you have large sections of the economy that are participating at suboptimal levels, it can greatly undermine progress."
Strategies for future growth
As such, APEC is considering a number of measures to stimulate an improved performance, with the aim of targeting the region's emerging middle-class consumers more effectively, while creating new opportunities for more people and businesses.
In broad terms, this will encompass policies such as human capital investment and social protection measures, as well as reforms of labour markets, financial markets and the wider institutional infrastructure.
One specific priority is making progress towards the introduction of a Free Trade Area of the Asia Pacific (FTAAP), a concept that has been discussed by the APEC Business Advisory Council since 2004, and could help to drive more open trade between regional economies.
The recent establishment of the Trans Pacific Partnership and the progress of the Pacific Alliance have been highlighted as important steps in realising the ambition of a functional FTAAP, with APEC calling for the completion of the Regional Comprehensive Economic Partnership to develop this concept further.
APEC members have also been advised to increase their focus on the services sector as the single biggest contributor to employment and output in the region, undertaking policy and regulatory reforms to address structural barriers to services trade, and setting up a new services cooperation framework.
Doris Magsaysay-Ho, the current chair of the APEC Business Advisory Council, said: "Global megatrends are changing the landscape and are creating new challenges on economies, business and society as a whole. Consumer demands are rapidly changing, compelling everyone to review business models and delivery systems."
