{
  "title": "How Trade Can Help Speed Asia’s Economic Recovery",
  "publication": "IMF Blog, November 19, 2021",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2021/11/19/blog-how-trade-can-help-speed-asias-economic-recovery",
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  "summary": "Trade has historically driven economic growth and poverty alleviation in Asia, but momentum in lowering trade barriers has slowed in recent years.",
  "sections": [
    {
      "heading": "Summary of findings",
      "content": "- Trade has historically driven economic growth and poverty alleviation in Asia, but momentum in lowering trade barriers has slowed in recent years.\n- While tariff barriers in Asia are low overall, a comprehensive measure of nontariff barriers for 159 economies (as far back as 1949) shows nontariff barriers remain relatively elevated in many Asian emerging market and developing economies.\n- The nontariff trade-restrictions index is compiled using detailed trade-barrier data in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions.\n- The index for Asia declined from near 20 in the 1960s to around 15 by 1995, but has since remained little changed.\n- Empirical analysis suggests easing nontariff barriers can boost GDP by about 1.6 percent after five years, with short-term gains of about 1 percent illustrated by Sri Lanka’s removal of export licensing, financing, and documentation requirements in the early 1990s.\n- IMF forecasts suggest GDP in 2024 will be 6 percent below the pre-crisis trend in Asian emerging and developing economies, equal to losses of about $1 trillion annually.\n- Gains from lowering nontariff barriers arise mainly through greater investment and productivity (specialization, technology transfer, reallocation to more productive firms), not primarily through higher net exports.\n- Nontariff barrier scores tend to be particularly high for low-income countries such as Nepal, Bangladesh, and Myanmar; large emerging economies such as China and India also have scope for reforms."
    },
    {
      "heading": "Trade-barrier context and historical trends",
      "content": "- Average tariffs in Asia fell sharply from more than 50 percent in the 1970s to single digits in the early 2000s, leaving limited room for further tariff reductions.\n- Nontariff barriers include licensing requirements, documentation hurdles for releasing foreign currency, restrictions on trade, payments, or exchanging foreign currencies, and other administrative obstacles.\n- Openness measures (share of goods and services trade in GDP, participation in global value chains) rose for decades but have stalled in recent years, indicating a slowdown in Asia’s traditional trade-driven growth engine even before the pandemic.\n- A forthcoming IMF working paper compiles a comprehensive index of trade restrictions for 159 economies dating back to 1949."
    },
    {
      "heading": "Quantified economic impacts",
      "content": "- Short-term GDP boost from significant reduction in nontariff barriers (example: Sri Lanka reforms): about 1 percent.\n- Five-year GDP boost from similar reforms: about 1.6 percent.\n- Potential to heal about a quarter of expected pandemic scarring via easing nontariff barriers (research detailed in the IMF’s Asia-Pacific Regional Economic Outlook).\n- IMF forecast: GDP in 2024 will be 6 percent below the pre-crisis trend in Asian emerging and developing economies, equal to losses of about $1 trillion annually."
    },
    {
      "heading": "Policy recommendations and reform priorities",
      "content": "- Reduce goods-related barriers:\n  - Remove import and export licensing requirements where present.\n  - Simplify or eliminate extensive documentation for releasing foreign currency.\n  - Lift restrictions on the use of foreign exchange to ease administrative delays and reduce transaction costs.\n- Reduce services restrictions:\n  - Ease restrictions on transactions beyond physical goods in areas such as travel, shipping, consulting, and international transfers.\n  - Consider reforms similar to Australia’s 1980s liberalizations to support expanding services trade.\n- Complement trade reforms with measures to mitigate distributional impacts:\n  - Provide financial support for the hardest hit populations.\n  - Implement retraining programs to help displaced workers find new jobs.\n  - Pursue policies reversing pandemic-induced setbacks to workforce education and skill levels.\n  - Reform labor and product markets to enhance adjustment and inclusion.\n- Prioritize economic reforms as vaccinations foster recovery to minimize post-pandemic scarring, especially in emerging and developing economies."
    },
    {
      "heading": "Mechanisms of benefit and risks",
      "content": "- Mechanisms:\n  - Increased investment and productivity through specialization, technology transfer, and reallocation to more productive firms.\n  - Administrative cost reductions and faster international transactions when licensing and documentation barriers are removed.\n- Risks and mitigation:\n  - Reallocation effects can produce winners and losers, often favoring the already better-off; accompanying social and labor-market policies are essential to mitigate inequality.\n\nIMF Blog — How Trade Can Help Speed Asia’s Economic Recovery (November 19, 2021).\n\n---\n\n\n References\n\n- 日本語\n- Asia-Pacific Regional Economic Outlook\n- Annual Report on Exchange Arrangements and Exchange Restrictions\n- Brave New World: Tracking Trade from Space\n- How Countries Can Diversify Their Exports\n- After a Strong Crisis Response, Asia Can Build a Fairer and Greener Future\n- Divergent Recoveries in Asia: History is not Destiny\n\nSource: https://www.imf.org/en/blogs/articles/2021/11/19/blog-how-trade-can-help-speed-asias-economic-recovery"
    }
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    "Authors: Pragyan Deb, Julia Estefania-Flores, Siddharth Kothari, Nour Tawk",
    "Published: November 19, 2021",
    "Trade has historically driven economic growth and poverty alleviation in Asia, but momentum in lowering trade barriers has slowed in recent years.",
    "While tariff barriers in Asia are low overall, a comprehensive measure of nontariff barriers for 159 economies (as far back as 1949) shows nontariff barriers remain relatively elevated in many Asian emerging market and developing economies.",
    "The nontariff trade-restrictions index is compiled using detailed trade-barrier data in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions.",
    "The index for Asia declined from near 20 in the 1960s to around 15 by 1995, but has since remained little changed.",
    "Empirical analysis suggests easing nontariff barriers can boost GDP by about 1.6 percent after five years, with short-term gains of about 1 percent illustrated by Sri Lanka’s removal of export licensing, financing, and documentation requirements in the early 1990s.",
    "IMF forecasts suggest GDP in 2024 will be 6 percent below the pre-crisis trend in Asian emerging and developing economies, equal to losses of about $1 trillion annually.",
    "Gains from lowering nontariff barriers arise mainly through greater investment and productivity (specialization, technology transfer, reallocation to more productive firms), not primarily through higher net exports.",
    "Nontariff barrier scores tend to be particularly high for low-income countries such as Nepal, Bangladesh, and Myanmar; large emerging economies such as China and India also have scope for reforms.",
    "Average tariffs in Asia fell sharply from more than 50 percent in the 1970s to single digits in the early 2000s, leaving limited room for further tariff reductions.",
    "Nontariff barriers include licensing requirements, documentation hurdles for releasing foreign currency, restrictions on trade, payments, or exchanging foreign currencies, and other administrative obstacles.",
    "Openness measures (share of goods and services trade in GDP, participation in global value chains) rose for decades but have stalled in recent years, indicating a slowdown in Asia’s traditional trade-driven growth engine even before the pandemic.",
    "A forthcoming IMF working paper compiles a comprehensive index of trade restrictions for 159 economies dating back to 1949.",
    "Short-term GDP boost from significant reduction in nontariff barriers (example: Sri Lanka reforms): about 1 percent.",
    "Five-year GDP boost from similar reforms: about 1.6 percent.",
    "Potential to heal about a quarter of expected pandemic scarring via easing nontariff barriers (research detailed in the IMF’s Asia-Pacific Regional Economic Outlook).",
    "IMF forecast: GDP in 2024 will be 6 percent below the pre-crisis trend in Asian emerging and developing economies, equal to losses of about $1 trillion annually.",
    "Reduce goods-related barriers:",
    "Reduce services restrictions:",
    "Complement trade reforms with measures to mitigate distributional impacts:",
    "Prioritize economic reforms as vaccinations foster recovery to minimize post-pandemic scarring, especially in emerging and developing economies.",
    "Mechanisms:",
    "Risks and mitigation:",
    "[日本語](https://www.imf.org/ja/News/Articles/2021/11/19/blog-how-trade-can-help-speed-asias-economic-recovery)",
    "[Asia-Pacific Regional Economic Outlook](https://www.imf.org/en/Publications/REO/APAC/Issues/2021/10/15/regional-economic-outlook-for-asia-and-pacific-october-2021)",
    "[Annual Report on Exchange Arrangements and Exchange Restrictions](https://www.imf.org/en/Publications/Annual-Report-on-Exchange-Arrangements-and-Exchange-Restrictions/Issues/2021/08/25/Annual-Report-on-Exchange-Arrangements-and-Exchange-Restrictions-2020-49738)",
    "[Brave New World: Tracking Trade from Space](https://blogs.imf.org/2021/11/02/brave-new-world-tracking-trade-from-space/)",
    "[How Countries Can Diversify Their Exports](https://blogs.imf.org/2021/09/22/how-countries-can-diversify-their-exports/)",
    "[After a Strong Crisis Response, Asia Can Build a Fairer and Greener Future](https://blogs.imf.org/2021/04/13/after-a-strong-crisis-response-asia-can-build-a-fairer-and-greener-future/)",
    "[Divergent Recoveries in Asia: History is not Destiny](https://blogs.imf.org/2021/02/23/divergent-recoveries-in-asia-history-is-not-destiny/)"
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