Support for small businesses and reforms crucial for growth
APEC economies should continue to pursue regulatory reforms to support and bolster small businesses in light of the current global economic situation, APEC’s Policy Support Unit (PSU) says.
According to the first APEC Economic Trends Analysis, real GDP in the APEC region is projected to grow by 4.1% in 2012 and 4.5% in 2013, while GDP in the world is forecast to slow to 3.3% in 2012 before accelerating to 3.9% in 2013.
The global economic slowdown and a series of natural disasters in the region have created new challenges for businesses, the report finds. This includes delays in investment decisions, declines in corporate performance, and difficulties in accessing credit due to deleveraging among banks.
“These challenges are particularly problematic for APEC’s small businesses due to their vulnerability to market fluctuations,” APEC Policy Support Unit director Denis Hew said.
“APEC’s policy responses to the crisis should therefore seek to address both temporary and structural deficiencies in the SME operating environment, in conjunction with other fiscal and monetary measures to maintain the region’s macroeconomic and price stability,” Dr Hew advised.
Small and medium sized enterprises represent a significant portion of businesses in the private sector in all APEC economies and employ over half of the region’s workforce. They are the key generators for employment and income, driving both innovation and growth.
“One of APEC’s ongoing priorities is to address obstacles that inhibit cross-border trade and investment by removing barriers to doing business, as well as supporting the region’s small businesses through capacity building efforts,” said Louis Bono, chair of the APEC Economic Committee.
“APEC is also continuing to pursue its new strategy for structural reform that includes creating a more business-friendly environment through eliminating constraints and barriers to business set-up and growth,” Bono explained.
These reforms are particularly relevant for emerging APEC economies where private enterprises face higher regulatory costs, the report says. In addition, in many emerging markets, businesses are facing extra pressure from the risk of rising inflation.
“Reforms are also important for developed APEC economies where weakening fiscal positions imply that, in the short to medium term, the public sector may find it difficult to provide the same stimulus to economic growth,” Hew concluded.
The PSU report recommends expediting the pace of structural reform among APEC economies and enhancing awareness of the areas where structural reform would add the most value to achieving a more resilient and competitive economy.
The PSU’s APEC Economic Trends Analysis provides an overview on emerging trends underlying the region’s economic prospects by providing in-depth analysis on recent macroeconomic and financial developments in the APEC region.
The APEC Policy Support Unit provides independent research and analysis to the forum’s 21 member economies to guide work on enhancing free trade and investment which contributes to strengthening economic growth in the region.
For the full analysis, go to: http://publications.apec.org/publication-detail.php?pub_id=1258
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