State of the Region 2018-2019

On behalf of the members of the Pacific Economic Cooperation Council (PECC), it is our pleasure to present our thirteenth annual report on the State of the Region. This year we have chosen to focus on the future of skills and work. In selecting this topic we were conscious that there are many issues confronting the Asia- Pacific, not least of which is the risks to the region from a trade war. At our General Meeting held in Jakarta in May 2018, the broad conclusion of the community of experts from business, government, the academe and civil society gathered there was on the increased importance of more not less international cooperation. These issues cannot be resolved solely by unilateral actions, they require cooperative solutions.

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State of the Region Report 2018-2019

CONTENT

I MESSAGE FROM THE CO-CHAIRS OF PECC

II EXPLANATION OF TERMS USED IN THE REPORT

III EXECUTIVE SUMMARY

IV CHAPTER 1: ASIA-PACIFIC ECONOMIC OUTLOOK

REGIONAL ECONOMIC OUTLOOK

• Figure 1.1: Asia-Pacific GDP Growth
• Figure 1.2: Expectations for Global Growth
• Figure 1.3: Growth Expectations for Selected Regions

RISKS TO GROWTH

• Figure 1.4: Risks to Growth
• Figure 1.5: Rising Concerns of Protectionism

TRADE GROWTH FALTERING

• Figure 1.6: Export Growth
• Figure 1.7: Import Growth

TRADE RESTRICTIONS NOT LIMITED TO TARIFFS

• Figure 1.8: Top 20 Trade Restricting Measures Implemented by Asia-Pacific Economies since 2008

FORWARD MOMENTUM ON TRADE REMAINS (DESPITE APPEARANCES TO CONTRARY)

TROUBLING SIGNS IN CAPITAL MARKETS

• Figure 1.9: Foreign Exchange Movements over past 12 months
• Figure 1.10: Foreign Reserves (months of imports)

PRIORITIES FOR APEC LEADERS’ DISCUSSIONS

• Figure 1.11: Priorities for APEC Leaders
• Figure 1.12: WTO and Multilateral Trading System as a priority for APEC leaders’ discussions

PROGRESS TOWARDS THE BOGOR GOALS AND THE FREE TRADE AREA OF THE ASIA-PACIFIC (FTAAP)

RISING TRADE TENSIONS AND THE FUTURE OF THE WTO AND MULTILATERAL TRADING SYSTEM

WHY THE NEED TO STRENGTHEN TRADE RULES?

• Cases Brought the WTO Dispute Settlement Mechanism

IMPACT OF THE TRADE WAR ON ECONOMIC GROWTH

• Figure 1.13: Impact of Trade War on Global Growth

IMPACT OF TRADE WARS WITHIN ECONOMIES

PROGRESS ON THE APEC GROWTH STRATEGY

• Figure 1.14: Narrowing Current Account Balances

NEED FOR A BROADER APPROACH TO ECONOMIC INTEGRATION

STRUCTURAL REFORM

• Figure 1.15: Priorities for APEC Economies Under RASSR (Mid-Term Review)
• Figure 1.16: Estimated change in Consumption Expenditure as a Share of GDP since 2007
• Figure 1.17: Estimated change in Investment Expenditure as a Share of GDP since 2007
• Figure 1.18: Estimated change in Government Expenditure as a Share of GDP since 2007
• Figure 1.19: Estimated change in Net Exports as a Share of GDP since 2007

CHANGING DEMOGRAPHIC STRUCTURES

• Figure 1.20: Asia-Pacific Population: 1990
• Figure 1.21: Asia-Pacific Population: 2030

INVESTING IN HUMAN CAPITAL IN THE DIGITAL AGE

FUTURE SKILLS CRITICAL TO GROWTH

• Figure 1.22: Growth Accounting in the Asia-Pacific Since 2000
• Figure 1.23: Labor Force Participation Rates

FUTURE OF REGIONAL COOPERATION AND INTEGRATION

• Figure 1.24: Perceptions of APEC
• Figure 1.25: Is APEC still as important as it used to be?

V CHAPTER 2: THE FUTURE OF JOBS AND SKILLS

BOX 1 - SOCIETAL IMPACT OF ARTIFICIAL INTELLIGENCE: OPPORTUNITIES AND CHALLENGES OF A TECH-CENTRIC FUTURE OF WORK

HOW DO WE EXPECT THE NATURE OF WORK TO CHANGE?

• Table 2.1: Workforce size: Expectations of change in overall economy by regional grouping (%)
• Figure 2.1: Impact of New Technologies on Jobs in Different Sectors of the Economy

WHAT KINDS OF OLD JOBS WILL DISAPPEAR AND WHAT NEW JOBS WILL BE CREATED?

• Figure 2.2: Impact of Technological Change on Occupations
• Table 2.2: Where will the new jobs be? Growth occupations (% of respondents expecting them to increase greatly) by sub-region
• Table 2.3: What jobs are most likely to be lost? Shrinking occupations (% of respondents expecting them to decrease greatly) by sub-region

DO WE HAVE THE RIGHT SKILLS IN THE REGION FOR THESE NEW JOBS?

• Figure 2.3: Shortage or Surplus of Workers by Occupation by 2030
• Table 2.4: Where will the intense skill shortages be? (% of respondents who thought there would be intense skills shortages for the following occupational categories by sub-region)
• Table 2.5: Where will the intense skill surpluses be? (% of respondents who thought there would be intense skill surpluses for the following occupational categories by sub-region)

THE IMPACT OF TECHNOLOGICAL CHANGE BY OCCUPATION

• Figure 2.4: Impact of Technological Change on Employment Size and Skills Mismatch

THE IMPACT OF TECHNOLOGICAL CHANGE BY OCCUPATION: DO EMERGING AND ADVANCED ECONOMIES EXPECT TO TRANSFORM DIFFERENTLY?

BOX 2 - THE APEC APP CHALLENGE: SKILLS FOR A NEW GENERATION

• Figure 2.5: Employment Size and Skills Mismatch
• Figure 2.6: Critical Skills Shortages and Surpluses

WHAT WILL HAPPEN TO THOSE WHO ARE LEFT BEHIND?

• Figure 2.7: How prepared are system for change? (Emerging Economies)
• Figure 2.8: How prepared are system for change? (Advanced Economies)

BOX 3 - PERSPECTIVE ON THE ROLE OF THE EDUCATION SYSTEM

• Table 2.6: Satisfaction with labor and education issues by stakeholder (% of respondents who said that they were not at all satisfied or only slightly satisfied with the following in their economies)
• Table 2.7: Satisfaction with labor and education issues by geography (%)

BOX 4 - THE FUTURE WORK FORCE

CONCLUSION

REFERENCES

VI CHAPTER 3: INDEX OF ECONOMIC INTEGRATION IN THE ASIA-PACIFIC

• Figure 3.1: Composite Index of Regional Economic Integration
• Table 3.1: Weights Used
• Table 3.2: Comparison of 2014 and 2015 Indices
• Figure 3.2: Intraregional Trade Flows (% of GDP)
• Figure 3.3: Intraregional Flows of Foreign Direct Investment (%)

ASIA-PACIFIC TRADE FLOWS

FOREIGN DIRECT INVESTMENT

• Figure 3.4: Intraregional Tourist Inflows (% of total)

TOURISM FLOWS

• Figure 3.5: Convergence Index

CONVERGENCE INDEX

• Figure 3.6: Deviation of GDP Per Capita

LESS DIVERGING INCOMES

• Figure 3.7: GDP Per Capita Growth
• Figure 3.8: Deviation Indicator: Urban Resident Ratio
• Figure 3.9: Deviation Indicator: Share of Non-agriculture in GDP
• Figure 3.10: Deviation Indicator: Expenditure on Education as a Proportion of GNI
• Figure 3.11: Deviation Indicator: Life Expectancy

VII ANNEX A

• Table 1: GDP Growth
• Table 2: CPI Inflation
• Table 3: Growth of Exports of Goods and Services
• Table 4: Growth of Imports of Goods and Services
• Table 5: Current Account Balance
• Table 6: GDP & CPI Weights
• Table 7: Trade Weights

VIII ANNEX B: RESULTS OF ASIA-PACIFIC POLICY COMMUNITY SURVEY

GOVERNMENT

BUSINESS

NON-GOVERNMENT: RESEARCH COMMUNITY/CIVIL SOCIETY/MEDIA

RESPONDENT BREAKDOWN

BREAKDOWN OF RESPONDENTS BY SECTOR

BREAKDOWN OF RESPONDENTS BY SUB-REGION

IX MEMBER COMMITTEES