APECMay 2020

Prepared by:
Asia-Pacific Economic Cooperation Policy Support Unit

Asia-Pacific Economic Cooperation Secretariat
35 Heng Mui Keng Terrace
Singapore 119616
Tel: (65) 6891-9600 │ Fax: (65) 6891-9690
Email: psugroup@apec.org Website: www.apec.org
Produced for:
Asia-Pacific Economic Cooperation
APEC#220-SE-01.4
This work is licensed under the Creative Commons Attribution-

NonCommercial-ShareAlike 3.0 Singapore License. To view a copy of
this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/sg/.
The views expressed in this paper are those of the authors and do not necessarily represent
those of the APEC Member Economies.
TABLE OF CONTENTS
List of figures iii

List of tables iii
List of boxes iii
Key abbreviations iv
Key messages v
1 What Goes Around Comes Around: Pivoting to a Circular Economy .............. 1
1.1 Introduction 1
1.2 Business models for a circular economy 3
1.3 Closing the loop 8
1.4 Policies for an international circular economy 8
1.5 Conclusion 14
2 Uncertainty Tests APEC’s Resilience amid COVID-19..................................... 15
2.1 APEC GDP growth 15

2.2 Inflation and monetary policy 17
2.3 Trade performance 18
2.4 Investment trends 20
2.5 Trade and investment measures 21
2.6 Near-term outlook, risks and opportunities 22
2.7 Conclusion 26
APEC Regional Trends Analysis, May 2020 iii
LIST OF FIGURES
Figure 1.1 Integrating circular economy models ............................................................................................ 8
Figure 2.1 Real GDP growth (%), 2018 and 2019 ........................................................................................ 15
Figure 2.2 Contributions to real GDP growth (%), 2019 .............................................................................. 16
Figure 2.3 Semi-annual real GDP growth (%), 2017–2019 .......................................................................... 16
Figure 2.4 Inflation rate (%), 2018–2019 ..................................................................................................... 17
Figure 2.5 Monetary policy rate (%), end-2018, end-2019 and end-March 2020 ........................................ 18
Figure 2.6 Growth in the volume of merchandise trade (%)......................................................................... 18
Figure 2.7 Growth in the value of merchandise trade (%) ............................................................................ 18
Figure 2.8 Growth in total services, 2018–2019 ........................................................................................... 19
Figure 2.9 Global FDI and greenfield investments (USD billion), 2018–2019 ............................................ 20
Figure 2.10 Top 10 FDI hosts, 2019 (USD billion) ...................................................................................... 20
Figure 2.11 Trade and trade-related measures in APEC (actual number), 2016–2019................................. 21
Figure 2.12 APEC GDP growth, actual (2000–2019) and projected (2020–2021) (%) ............................... 23
LIST OF TABLES
Table 1.1 The 9R framework of the circular economy ................................................................................... 2
Table 2.1 Value and growth in merchandise trade, 2018–2019 .................................................................... 19
Table 2.2 Value and growth in trade-in-services, 2018–2019 ...................................................................... 19
Table 2.3 Trade and trade-related measures in APEC, mid-October 2018 to mid-October 2019................ 22
Table 2.4 Comparing near-term GDP projections (%) ................................................................................. 23
LIST OF BOXES
Box 1.1 COVID-19 and the circular economy ............................................................................................... 5
Box 2.1 Tackling the pandemic through regional cooperation ..................................................................... 25
APEC Regional Trends Analysis, May 2020 iv
KEY ABBREVIATIONS
APEC Asia-Pacific Economic Cooperation

FOMC Federal Open Market Committee (United States)
FDI foreign direct investment
GDP gross domestic product
IMF International Monetary Fund
NEER nominal effective exchange rate
OECD Organisation for Economic Co-operation and Development
PSU Policy Support Unit (APEC)
UNCTAD United Nations Conference on Trade and Development
WTO World Trade Organization
APEC Regional Trends Analysis, May 2020 v
KEY MESSAGES
I. What Goes Around Comes Around: Pivoting to a Circular Economy
 The COVID-19 pandemic has highlighted the world’s interconnectedness, showing

how a virus can quickly circle the globe and how policy decisions made years ago
can affect us now. This applies to waste as well: the waste we throw away has a
tendency of coming back in our air, water and food, directly affecting our
livelihoods, economy and health.
 The traditional model of economic production follows a linear pattern: resources

are gathered, processed and consumed; byproducts are disposed as waste and do
not re-enter the productive chain. A more efficient system would ensure that
consumed resources are brought back to a state of reusability, so that waste is
minimised.
 One such system that minimises waste and optimises resource use is the circular
economy model, where reuse, repurposing and recycling of materials are built into
production and logistics. In this model, waste is an opportunity.
 Rethinking business models in terms of the circular economy presents opportunities

for efficiency, innovation and sustainability, for example:
- Sharing platforms facilitate access to and shared use of underutilised products.
- Product as a service sells the usage of a product instead of the product itself.
- Circular supplies represents a model for developing components that are
reusable and recyclable at the end of a product’s life.
- Product life extension prolongs the useful life of a product through improved
product design and long-term maintenance.
- Resource recovery captures byproducts and waste in manufacturing such that
they can be used in other production processes.
 Firms applying circular economy principles have shown their ability to address
short-term supply shortages while reducing waste. During the COVID-19
pandemic, firms applied the circular supplies, product life extension, and resource
recovery models to quickly produce urgently needed medical supplies such as face
masks and personal protective equipment.
 Adopting circular economy principles on a larger scale will have global

implications. Highly interlinked global supply chains will necessitate collaboration
and cooperation across multiple actors in the supply chain. Likewise, specialisation
will render new opportunities for businesses in the refurbishing, repairing and
recycling industries.
APEC Regional Trends Analysis, May 2020 vi
 Regional cooperation, and APEC in particular, has an important role to play in

facilitating the transition to a circular economy. Some areas that APEC can work
on are encouraging the standardisation of processes, technologies and materials
involved in the circular economy; disseminating information about the circular
economy; and elevating circular economy-related discussions to a higher level.
II. Uncertainty Tests APEC’s Resilience amid COVID-19
 Economic and trade growth in the APEC region has been slowing down in 2019,
even before the onset of the COVID-19 pandemic. The region’s GDP growth
slowed down to 3.6 percent in 2019 from 4.2 percent in 2018, due to uncertainty
arising largely from persistent trade and technology tensions.
 A trading environment weakened by tensions, tariff measures and other trade

restrictions has resulted in significant contractions in the volume and value of
merchandise trade. Growth in the volume of merchandise exports was substantially
lower in 2019 at 0.6 percent compared to 4.3 percent in 2018, while the value of
merchandise exports contracted by 1.9 percent in 2019 from a growth of 8.9 percent
in 2018.
 The APEC region became the epicentre of the COVID-19 pandemic when it struck,
infecting more than 5.4 million people worldwide as of 25 May 2020, almost half
of that number from the APEC region.
 The COVID-19 pandemic is a health and economic crisis of unprecedented

proportions, prompting economies across the globe to impose containment
measures and bringing economic activity to a near-standstill. The severity of the
pandemic as well as extreme uncertainty as to its duration and lingering economic
effects have led to the projection of a global economic contraction of 3.0 percent
in 2020.
 Mirroring the downward direction of the global economy, the APEC region is
expected to contract by 2.7 percent in 2020, equivalent to an estimated output loss
of USD 2.1 trillion. This is worse than the near-zero growth recorded amid the
2008–2009 global financial crisis.
 A global economic rebound is forecasted for 2021, with the APEC region growing
by 6.3 percent. This rebound hinges on the containment of the pandemic by the
second quarter and the effectiveness of economic stimulus measures to support
economic recovery.
 Getting back on the path of economic recovery post-pandemic requires a

coordinated approach that could only be achieved through regional cooperation.
APEC as a region needs to bolster health systems, improve social protection,
exercise prudent fiscal management, and maintain monetary stability to be able to
deploy emergency measures during episodes of crisis.
APEC Regional Trends Analysis, May 2020 vii
 APEC also needs to enhance regional cooperation mechanisms to facilitate the free
flow of information and the supply of essential products as well as to implement
coordinated stimulus measures as needed. This has been emphasised by the APEC
Ministers Responsible for Trade when they directed the Senior Officials to develop
a coordinated strategy for collecting and sharing information on policy actions and
economic measures implemented by APEC economies to respond to the challenges
brought about by the pandemic.
 Achieving economic growth that is sustainable and inclusive remains paramount,

but as the COVID-19 pandemic has taught the world, preparedness in the face of
any crisis, pandemic or shock is equally important. Toward this end, regional
cooperation remains crucial in boosting health and economic resilience to prepare
for the next pandemic.
1 WHAT GOES AROUND COMES AROUND:
PIVOTING TO A CIRCULAR ECONOMY 1
1.1 INTRODUCTION
The Earth is a thermodynamically closed system where matter is cycled between the
atmosphere, hydrosphere and lithosphere. 2 In such a system, what goes around comes
around: the water we drink was once inside a trilobite, while the coal for our power plants
once stood as mighty conifers. Even waste has a way of coming around.
The direct impact of waste on livelihoods and the economy are well known and self-
evident, but the waste we throw away is also coming around, including in our food. For
example, a discarded plastic bottle could end up in one of the garbage patches in the
Pacific,3 where it is consumed by marine animals and eventually enter the human food
system. Chemical waste has a more palpable impact: mercury from industrial waste has
made its way into fatty fish such as salmon and swordfish, 4 resulting in women being
advised to limit their consumption of fatty fish during pregnancy.5
Indeed, producing waste in a closed system is not efficient. An efficient closed system
ensures that consumed resources are brought back to a state of reusability: the water and
food cycles are examples of how resources are conserved in the natural world. However,
traditional models of human economic production do not follow a cyclical pattern but a
linear one: resources are gathered, processed and consumed; byproducts are disposed as
waste and do not re-enter the productive chain. This production model is unsustainable as
it is impossible to produce an infinite number of goods with the finite amount of resources
on the planet. So long as production continues to heavily rely on natural resources without
1
Prepared by Satvinderjit Kaur Singh, Jason Carlo O. Carranceja and Emmanuel A. San Andres, APEC
Policy Support Unit (PSU).
2
A thermodynamically closed system is one where matter is kept in the system but energy is allowed to enter
or exit. An isolated system is one where both energy and matter are kept within the system. Earth is
considered a closed system as matter is kept within the planet (except for occasional meteorite impacts or
satellite launches, which are negligible in terms of mass relative to the Earth) while energy, in the form of
heat from the Sun, is allowed to enter and exit. For a discussion of thermodynamic systems in the context of
the Earth sciences, see Ian J. Smalley and Claudio Vita-Finzi, “The Concept of ‘System’ in the Earth Sciences,
Particularly Geomorphology,” GSA Bulletin 80, no. 8 (1 August 1969): 1591–4,
https://doi.org/10.1130/0016-7606(1969)80[1591:TCOSIT]2.0.CO;2; Garth W. Paltridge, “Climate and
Thermodynamic Systems of Maximum Dissipation,” Nature 279 (1979): 630–1,
https://www.nature.com/articles/279630a0.
3
US Department of Commerce: National Oceanic and Atmospheric Administration, “Garbage Patches: What
and Where Are Garbage Patches?” 11 July 2013, https://marinedebris.noaa.gov/info/patch.html.
4
US Environmental Protection Agency, “Mercury Study Report to Congress Volume III: Fate and Transport
of Mercury in the Environment” (December 1997), http://www.epa.gov/ttn/oarpg/t3/reports/volume3.pdf;
Jane M. Hightower and Dan Moore, “Mercury Levels in High-End Consumers of Fish,” Environmental
Health Perspectives 111, no. 4 (1 April 2003): 604–8, https://doi.org/10.1289/ehp.5837.
5
Xue Fei et al., “Maternal Fish Consumption, Mercury Levels, and Risk of Preterm Delivery,” Environmental
Health Perspectives 115, no. 1 (1 January 2007): 42–7, https://doi.org/10.1289/ehp.9329; Sharon K. Sagiv et
al., “Prenatal Exposure to Mercury and Fish Consumption during Pregnancy and Attention-
Deficit/Hyperactivity Disorder-Related Behavior in Children,” Archives of Pediatrics & Adolescent Medicine
166, no. 12 (1 December 2012): 1123–31, https://doi.org/10.1001/archpediatrics.2012.1286.
APEC Regional Trends Analysis, May 2020 2
considering their reusability and sustainability, natural resource depletion and waste
accumulation will eventually constrain economic growth.
Recently, firms and economies have been contemplating a shift to a circular economy
model that minimises or eliminates waste production.6 A circular economy is a
regenerative system in which resource input and waste, emission, and energy
leakage are minimised by slowing, closing and narrowing material and energy
loops … through long-lasting design, maintenance, repair, reuse,
remanufacturing, refurbishing, and recycling.7
The system ensures that consumed resources are brought back to a state of reusability and
can re-enter the productive chain, resulting in minimal resources ever leaving the system
(see Table 1.1). Rather than thinking about how to utilise waste after generating it, a
circular economy model reduces resource intensiveness and considers byproducts of
production and consumption as potential resources, working out the logistics of making
them economically productive at the outset.
Table 1.1 The 9R framework of the circular economy

Strategy Examples
R0 Refuse Avoid the use of raw materials by Avoid packaging where possible
abandoning the function of a product
R1 Rethink Make the use of a product more Shared use of products like vehicles,
intensive washing machines
R2 Reduce Consume less raw materials or Buy fewer consumer products, build
increase production efficiency well-insulated houses to reduce
energy consumption for heating
R3 Reuse Use discarded products that are still Buy secondhand goods, return
in good condition and fulfil their packaging to retailer for reuse
original function
R4 Repair Repair a defective product so that it Repair defective part of an electronic
can be used for its original function product instead of buying a new
product
R5 Refurbish Redesign and restore an old product Refurbish an electronic product by
replacing the old parts with new ones
R6 Remanufacture Reuse functional discarded parts to Use functional parts of an old laptop
manufacture new product with the to produce a new laptop
same function
R7 Repurpose Reuse functional discarded parts to Use functional part of a laptop to
manufacture a new product with a manufacture a digital fan
different function
R8 Recycle Process materials to attain the same Recycle PET bottles to attain PET
or a lower quality of the material pellets
R9 Recover Incinerate leftover material and Use heat from combustion to drive
recover energy generators to produce electricity
Source: Adapted from Julian Kirchherr, Denise Reike and Marko Hekkert, “Conceptualizing the Circular
Economy: An Analysis of 114 Definitions,” Resources, Conservation and Recycling (December 2017),
https://doi.org/10.1016/j.resconrec.2017.09.005.
6
For a discussion of the circular economy in the context of APEC, see Satvinderjit Kaur Singh, “Circular
Economy: Don’t Let Waste Go to Waste” (Singapore: APEC, January 2020),
https://www.apec.org/Publications/2020/01/Circular-Economy---Dont-Let-Waste-Go-to-Waste.
7
Martin Geissdoerfer et al., “The Circular Economy – A New Sustainability Paradigm?” Journal of Cleaner
Production 143 (February 2017): 757–68, https://doi.org/10.1016/j.jclepro.2016.12.048.
Rethinking business models in terms of the circular economy has presented opportunities
for efficiency, innovation and sustainability. Firms applying a circular economy model can
be categorised into five broad categories: sharing platforms, product as a service, circular
supplies, product life extension, and resource recovery.8
1.2 BUSINESS MODELS FOR A CIRCULAR ECONOMY
Business models that assist the transition to a circular economy are practised on both the
consumption and production sides. Models that optimise resource use on the consumers’
end promote the concept of collaborative consumption, defined by Botsman and Rogers as
‘traditional sharing, bartering, lending, trading, renting, gifting, and swapping, redefined
through technology and peer communities’.9 The concept of collaborative consumption is
seen in firms that practice business models like sharing platforms and product as a service
(PaaS).
On the production side, businesses have facilitated the transition to a circular economy by
finding ways to make production more efficient and sustainable. According to the
Organisation for Economic Co-operation and Development (OECD), three main strategies
are useful in transforming production processes: 10
 Closing material loops – using waste as a resource through product reuse and recycling
 Extending material loops – creating more durable products to reduce demand for new
goods
 Narrowing material loops – improving the efficiency of resource utilisation to reduce
generation of waste.
The concept of closing material loops can be seen in the practice of circular supplies, which
involves developing products that are designed to be fed back into the production and
consumption cycle. Extending material loops is reflected through product life extension,
which involves creating more durable products with longer lifespans. Finally, narrowing
material loops is implemented by businesses that find ways to minimise wastage in the
production cycle by making use of manufacturing byproducts and waste.
1.2.1 Sharing platforms
Businesses engaged in sharing platforms promote the efficient use of existing resources by
facilitating access to and shared use of underutilised products. Shared use allows
individuals to access resources without the need to buy their own, hence reducing the
demand to make more of such products while expanding their utilisation. Libraries are one
of the most traditional examples of a sharing platform. Laundromats are another. Some
8
Peter Lacy, Justin Keeble and Robert McNamara, “Circular Advantage: Innovative Business Models and
Technologies to Create Value in a World without Limits to Growth” (Accenture Strategy, 2014),
https://www.accenture.com/t20150523t053139__w__/us-en/_acnmedia/accenture/conversion-
assets/dotcom/documents/global/pdf/strategy_6/accenture-circular-advantage-innovative-business-models-
technologies-value-growth.pdf; Robert Bark et al., “Supporting the Circular Economy Transition: The Role
of the Financial Sector in the Netherlands” (Oliver Wyman, 2017), https://www.oliverwyman.com/
content/dam/oliver-wyman/v2/publications/2017/sep/CircularEconomy_web.pdf.
9
Rachel Botsman and Roo Rogers, What’s Mine Is Yours: The Rise of Collaborative Consumption (New
York: HarperCollins, 2010), 15.
10
Andrew McCarthy, Rob Dellink and Ruben Bibas, “The Macroeconomics of the Circular Economy
Transition: A Critical Review of Modelling Approaches” (OECD Environment Working Papers, 18 April
2018, https://doi.org/10.1787/af983f9a-en.
industries have adopted rentals as their business model. For example, Bike Santiago
expands public transportation options through bike sharing, while co-living and co-
working space providers like Hmlet and Gorilla Space create arrangements for people to
share limited living and working spaces, reducing demand for real estate.
Sharing platforms have also leveraged information and communications technology (ICT)
to facilitate sharing of physical resources and services. Ride-hailing platforms like Didi,
Uber and Grab match a passenger with drivers or other passengers, allowing people to
share transportation options. Rentzi has taken sharing further by providing an online
platform for people to advertise any item they want to rent out, whether it be cars, clothes,
kitchen appliances or hardware equipment.
1.2.2 Product as a service
Another business model that optimises consumption is one that offers a product as a service
(PaaS). PaaS focuses on maximising the usage derived from a product rather than the
number of physical units of a product sold. For example, instead of selling ownership of
DVDs, light bulbs and plane engines, businesses sell access to the entertainment media,
number of light hours and length of distance travelled derived from these products. This
incentivises firms to build products that are more durable and flexible for future
maintenance and upgrades. Unlike sharing platforms, clients of PaaS subscribe to a service
from the seller, which means that they would have access to the services on demand.
PaaS contributes to the circular economy on both the consumer’s and producer’s end. On
the consumer’s side, PaaS could reduce demand for more physical goods as businesses
find novel ways of fulfilling the demand. Netflix and Spotify digitalised their video and
music content, increasing the spread of entertainment media but also eliminating the need
for physical CDs and DVDs. Moreover, they provide a way to make media content non-
rival, allowing people to simultaneously access them without depriving other subscribers
of access to the same content.
PaaS also improves production as it incentivises businesses to develop longer-lasting

products. This can extend the usable life of products, hence tempering the demand for more
of such goods. For example, light bulb manufacturer Philips provides lighting-as-a-service
to clients such as airports. Under this model, Philips sells lighting services to its clients by
installing and operating proprietary lamps at its clients’ facilities, while maintaining
ownership over the light bulbs. This is a win-win solution for Philips and its clients: clients
will no longer have to do their lighting maintenance themselves, while Philips can collect
data on product usage and focus on extending the life cycle of its products.
1.2.3 Circular supplies
Businesses have implemented the idea of circular supplies by designing products that are
recyclable and reusable. Waste can be repurposed; for example, empty pasta sauce bottles
could be used as pen holders, while old fabric could be stitched into bags and purses. Some
large companies have expressed interest in supporting initiatives focused on reuse. Since
plastic is one of the most common and problematic forms of waste, companies have
focused efforts on reducing such waste.11 Procter & Gamble and Unilever collaborated
with TerraCycle to establish Loop, an online shopping platform that provides reusable
packaging for products ranging from food to cosmetics. Customers make a one-time
purchase of a reusable container for the product of their choice. This container is later
returned to the manufacturers and subsequently treated, cleaned and refilled. The refilled
containers can then be disseminated back to other customers.
A similar concept is practised in packaging-free stores. These stores typically sell products
stored in huge containers with dispensers, and customers are expected to bring their own
containers to procure the products. Packaging-free stores contribute to the circular
economy as they mitigate the need for single-use packaging and empower consumers to
purchase exactly how much they need, allowing them to reduce waste on their end. 12
Repurposing and recycling products have also proven valuable amid the shortages
experienced due to COVID-19 (Box 1.1).
Box 1.1 COVID-19 and the circular economy
To contain the ongoing COVID-19 pandemic, many economies have imposed

lockdowns that have led to the temporary closure of firms in sectors such as aviation,
logistics and manufacturing. Meanwhile, some exporters of medical products such as
face masks and other personal protective equipment (PPE) have imposed export bans
and other restrictions to ensure domestic supply.13 The constrained supply coupled with
increased demand due to the pandemic has inadvertently led to shortages of critical
medical supplies needed in the battle against COVID-19.
In this context, firms applying circular economy principles have shown their ability to
address short-term supply shortages while reducing waste. Businesses are helping fill
these shortages by adopting innovative and sustainable practices to produce PPE and
other medical equipment. Moreover, the innovations that originate from the ongoing
crisis can be applied to other economic sectors in the future.
Firms applying circular economy practices have been able to redirect their production
resources toward producing necessary medical equipment. For example, some producers
are using machines developed by Precious Plastic, an open-source hardware plastic
recycling initiative, to turn recycled plastic into face shields and masks.14 The machines
are capable of producing PPE 75 times faster than 3D printers. Several European
11
Laura Parker, “Beach Clean-up Study Shows Global Scope of Plastic Pollution,” National Geographic, 10
October 2018, https://www.nationalgeographic.com/environment/2018/10/greenpeace-beach-cleanup-
report-highlights-ocean-plastic-problem/.
12
Elisa F. Beitzen-Heineke, Nazmiye Balta-Ozkan and Hendrik Reefke, “The Prospects of Zero-Packaging
Grocery Stores to Improve the Social and Environmental Impacts of the Food Supply Chain,” Journal of
Cleaner Production 140 (1 January 2017): 1528–41, https://doi.org/10.1016/j.jclepro.2016.09.227.
13
World Customs Organization, “List of National Legislation of Countries that Adopted Temporary Export
Restrictions on Certain Categories of Critical Medical Supplies in Response to COVID-19,”
http://www.wcoomd.org/en/topics/facilitation/activities-and-programmes/natural-disaster/list-of-countries-
coronavirus.aspx.
14
India Block, “Recycled Plastic Turned into Face Shields for Coronavirus Pandemic,” Dezeen, 8 April 2020,
https://www.dezeen.com/2020/04/08/precious-plastic-coronavirus-recycled-face-shields-respirator-masks-
handles/.
economies are now using these machines to supplement declining supplies. Since the
machines expose plastics to temperatures over 200 degrees Celsius, the recycled plastics
are sterilised in the process. This also allows the plastic from used equipment to be
cleaned, shredded and recycled in the machines for future production. Similarly, Nike is
redirecting recycled material meant for the production of Nike Air soles into the
production of PPE.15
Other businesses have adopted innovative ways to adapt their production processes and
embrace circular practices. A Minneapolis-based textile producer has shifted its
production to making PPE gear with the use of upcycled scrap fabrics.16 Batelle, a non-
profit institute engaged in scientific research, developed a technology that can
decontaminate N95 masks using vaporised hydrogen peroxide. 17 The technology
received authorisation for use from the American Food and Drug Administration at the
end of March 2020 and is now being used in several hospitals in the United States. The
novel technology enables masks to be decontaminated 20 times before affecting its
quality and has provided a safe, longer-lasting alternative to single-use masks. All these
efforts will help bridge shortages during the current pandemic and are likely to continue
to boost recycling efforts even after the pandemic has subsided.
Businesses will benefit from adopting similar innovations in their production processes.
Raw material prices are expected to increase during a pandemic, and since raw material
costs make up a large part of total costs, businesses stand to profit significantly from
becoming more circular. 18 Moreover, businesses using reusable materials to
manufacture PPE can benefit from the trade of scraps and reusable materials.
The current pandemic should not be viewed as a speed bump in businesses’ and
economies’ pursuit of sustainability and circularity. Rather, it provides opportunities to
use innovation to adapt to current resource constraints in a sustainable manner.
1.2.4 Product life extension
Product life extension is another strategy to support the transition to a circular economy. It
entails efforts to prolong the useful life of an item to reduce the demand for a new product.
Some industries have been doing this for a long time. For example, an automobile is
typically a long-term, high-cost investment, which, if maintained properly, lasts for several
decades. Some companies offer lifetime warranties and repair commitments to make their
15
Sheena Butler-Young, “How Nike Retooled Its Supply Chain in Two Weeks to Make High-Tech Face
Masks,” Footwear News, 21 April 2020, https://footwearnews.com/2020/business/technology/nike-face-
masks-production-coronavirus-1202970542/.
16
“Airtex Group l Acme Made Shift Manufacturing to PPE,” Furniture Today, 22 April 2020,
https://www.furnituretoday.com/covid-19-and-home-furnishings-industry/airtex-grouplacme-made-shift-
manufacturing-to-ppe/.
17
Saabira Chaudhuri, “Coronavirus Prompts Hospitals to Find Ways to Reuse Masks Amid Shortages,” Wall
Street Journal, 31 March 2020, sec. Business, https://www.wsj.com/articles/coronavirus-prompts-hospitals-
to-find-ways-to-reuse-masks-amid-shortages-11585647000.
18
Astrid Wynne, “After the Crisis, Let’s Use Technology to Move towards a Circular Economy,” Data
Center Dynamics, 30 March 2020, https://www.datacenterdynamics.com/en/opinions/after-crisis-lets-use-
technology-move-towards-circular-economy/.
products last longer. Patagonia offers repair services for their products to encourage clients
to repair old items instead of replacing them with new ones.
Building upgradable products is another way to promote product life extension. The
electronics industry generates large amounts of electronic waste (e-waste), which is
exacerbated by the fast turnover of gadgets due to obsolescence. To address this,
companies such as LG and Google are investing in research on modular phones. The
hardware of these phones would be upgradable and repairable, negating the need to replace
the entire device, thereby reducing e-waste.
Products with longer lifespans can in turn aid the strengthening of the resale market, or the
secondhand economy. Online thrift store thredUp has projected that the secondhand
apparel market would double from USD 24 billion to USD 51 billion, and that as much as
one-third of the clothes in closets in the US will be composed of secondhand apparel by
2033.19 Given the projected high uptake of secondhand clothes, greater focus on quality
fabrics can be both profitable for businesses and sustainable for the environment.
Technology can also support trade in secondhand goods: e-commerce sites like
MercadoLibre and Carousell are providing new avenues for people and businesses to trade
secondhand items.
1.2.5 Resource recovery
Resource recovery reduces waste by utilising manufacturing byproducts from other

production processes. Some companies have attempted to maximise resource recovery by
adopting zero-waste manufacturing as an ethos for their processes. For example, Dignity
Coconuts has observed that many firms that utilise coconuts typically just use the water or
oil of a coconut and leave up to 80 percent of the fruit to waste.20 This is extremely wasteful
as the various parts of the coconut can be used for a myriad of things: old stems and leaves
can be turned into fertiliser; the husks and fibres can be used for upholstery; and the wood
of the coconut tree can be used for furniture and construction. To address this, Dignity
Coconuts reached out to communities to train them on how to process the different parts
of the coconut to make value-added products.
The concept of resource recovery does not have to be constrained to the same industry. For
example, Nike captures waste in other sectors and incorporates it into their production
processes: plastic waste from single-use packaging such as plastic bottles can be processed
into polyester fabric, which can be used in textile manufacturing. In 2018, 75 percent of
all shoes and apparels produced by Nike contained some form of recycled material.21
19
thredUp, “2019 Fashion Resale Market and Trend Report,” 2019, https://www.thredup.com/resale.
20
Dignity Coconuts, “Dignity Coconuts,” 2016, https://dignitycoconuts.com.
21
Nike, “Nike’s Latest Sustainable Innovations and Environmental Impact,” Nike News, 2018,
https://news.nike.com/news/sustainable-innovation-air-bag-manufacture.
1.3 CLOSING THE LOOP
The five business models fit along different parts of the value chain, absorbing byproducts
in some parts of the value chain and reinserting them back into the economy, thereby
contributing to the circularity of the value chain (Figure 1.1). The circular economy has
great potential to stimulate the economy by providing new trading and business
opportunities.
These opportunities are not just limited to the local context. While some models in the
circular economy like sharing platforms allow for more efficient use of resources in a
locale, other business opportunities like resource recovery may be more efficient if
economies could trade production byproducts with other economies that have the
specialisations to process them. Similarly, international trade can help facilitate other
business models like product life extension in the sourcing of parts necessary to repair or
upgrade products, as well as in supporting wider trade of secondhand goods. As such, there
is scope to introduce policies that enable the uptake of business models that promote the
circular economy at a regional level.
Figure 1.1 Integrating circular economy models
Source: Adapted from Mirjam Bani and Marieke Blom, “Rethinking the Road to the Circular Economy,”
(January 2020), https://think.ing.com/uploads/reports/Rethinking_the_road_to_the_circular_economy
_FINAL_RB1.pdf.
1.4 POLICIES FOR AN INTERNATIONAL CIRCULAR ECONOMY
The circular economy is dependent on international trade, with some economies and the
OECD even going as far as to consider trade a fundamental aspect of the circular
economy.22 There are two reasons for this: interconnectedness and economies of scale. In
today’s highly globalised and dependent world economy, global supply and value chains
are deeply interlinked. A majority of products are made up of intermediate parts sourced
from other economies.23 According to the World Investment Report by the United Nations
Conference on Trade and Development (UNCTAD), approximately 60 percent of global
22
Confederation of Danish Industry et al., “Position Paper: Nordic Approach to Circular Economy” (October
2019), https://ek.fi/wp-content/uploads/Nordic-position-paper-circular-economy-10-2019-1.pdf; Shardul
Agrawala and Shunta Yamaguchi, “International Trade and the Transition to a Circular Economy” (OECD,
October 2018), https://www.oecd.org/environment/waste/policy-highlights-international-trade-and-the-
transition-to-a-circular-economy.pdf.
23
Deborah Kay Elms and Patrick Low, eds, Global Value Chains in a Changing World (Geneva: World
Trade Organization, 2013).
trade in 2012 involved intermediate goods and services.24 As a result, the capacity of a
business or industry to embrace circularity will depend on the ability of its partners to abide
by the same principles of circularity.
The complex interdependence of international supply chains can present upfront costs to
firms embracing circular principles. However, this can be overcome through efficiency and
gains in goodwill. An increasing number of multinational businesses are pledging only to
work with suppliers that abide by social and environmental standards.25 A study by EY
finds supply chain sustainability to be a critical consideration for firms, with many
businesses likely to transition to sustainable procurement within the next 10 years.26 The
global ramifications of this transition will be significant as the increased calls for
sustainability will translate into opportunities for pursuing sustainable development in
other economies.27 As trade in sustainable goods and services grows, some economies have
strengthened their standards to support these industries, requiring their trading partners to
adopt similar standards as well. In light of the deep connections between trade networks
and the shift in business standards and expectations toward sustainability, it is worthwhile
for economies and businesses to consider how to incorporate circularity in their business
models.
The second consideration is the need for scale. At various stages of the circular economy,
there is a need for experts and technologies specialising in refurbishing, repurposing or
recycling used goods, or recovering energy after all other options have been exhausted. At
the economy level, the costs involved in building these capabilities may be significant due
to the lack of scale and the specialisations needed.28 Trade provides business opportunities
by enabling economies to use the specialisations and innovations available in other
economies and by providing them access to a larger market to benefit from economies of
scale. For example, economies that are manufacturing hubs are more capable of efficiently
using recycled goods in production processes. 29 Similarly, economies with more
technologically savvy industries might be better able to repurpose a part of a used product
in the development of another. The circular economy does not only provide global
opportunities for trade in goods but also services. Economies with a robust supply of talents
and skills, such as in the ICT sector, can assist digitally enabled businesses such as sharing
platforms by providing the necessary ICT skills.
24
United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2013:
Global Value Chains: Investment and Trade for Development (New York: UN, 2013).
25
Verónica H. Villena and Dennis A. Gioia, “A More Sustainable Supply Chain,” Harvard Business Review,
1 March 2020, https://hbr.org/2020/03/a-more-sustainable-supply-chain.
26
EY, “The State of Sustainable Supply Chains: Building Responsible and Resilient Supply Chains” (EY,
2016), https://www.ey.com/Publication/vwLUAssets/EY-building-responsible-and-resilient-supply-chains/
$FILE/EY-building-responsible-and-resilient-supply-chains.pdf.
27
Marianne Kettunen, Susanna Gionfra and Misty Monteville, “EU Circular Economy and Trade: Improving
Policy Coherence for Sustainable Development” (Brussels/London: Institute for European Environmental
Policy, 2019), https://ieep.eu/uploads/articles/attachments/f560794d-c411-4895-8ae9-910c65548f33/EU%
20trade,%20CE%20and%20sustainable%20development%20(IEEP%202019)%20FINAL.pdf?v=6374157
7228.
28
Bark et al., “Supporting the Circular Economy Transition: The Role of the Financial Sector in the
Netherlands.”
29
Kettunen, Gionfra and Monteville, “EU Circular Economy and Trade.”
Regional cooperation and policy coordination can help economies and firms to capitalise
on the opportunities in a circular economy. The remainder of this section discusses some
of the policy solutions that arise from the discussion above.
1.4.1 Develop standards and definitions
An often-discussed policy gap that hinders the implementation of circular economy

principles is the lack of international standards and definitions on the processes and
materials involved. 30 The lack of globally accepted definitions of waste and reusable
materials impedes the adoption of circularity in a global context as it hinders cooperation.
There is a further gap in identifying and harmonising the processes necessary to transform
waste into a secondary raw material of a certain quality. Regulations on the processing and
trading of waste cannot be more urgent, given the newly imposed bans on the trade of
waste by several economies owing to the import of poor-quality waste.
Similarly, economies aiming to improve circularity will benefit from adopting global
recyclability standards and eco-labelling schemes that harmonise waste standards and
treatment practices.31 Such standards and labels verify the absence of hazardous materials
and allow products to be recycled or reused anywhere. This will increase trust across
economies and lead to more trade in intermediate and recycled products, hence supporting
the development of a circular economy.
In addition to the need to benchmark the quality of waste for repurposing, there is a need
to liberalise the trade of reusable materials as well as goods and innovations that promote
circularity. 32 Numerous free trade agreements (FTAs) promote the liberalisation of
environmental goods and services, but these may need to be revised from time to time
given the level and pace of innovations in sustainability. APEC endorsed a list of 54
environmental goods and services in 2012 for trade liberalisation;33 revisions to the list
could be necessary to help keep up with the needs of a circular economy.
The APEC Sub-Committee on Standards and Conformance could collaborate with APEC
fora such as the Ocean and Fisheries Working Group, the Energy Working Group and the
Policy Partnership on Food Security to understand waste intensity and discuss standards in
these industries. This will help to identify commonalities, and assist policy formation and
trade in recyclable materials and waste. APEC could also discuss the development of
regional certifications pertaining to quality assurance similar to APEC’s Privacy
Recognition for Processors (PRP) certification, which certifies a processor’s ability to
effectively implement privacy requirements.34
30
Kettunen, Gionfra and Monteville.
31
32
33
APEC Committee on Trade and Investment, “APEC Cuts Environmental Goods Tariffs,” 28 January 2016,
https://www.apec.org/Press/News-Releases/2016/0128_EG.
34
Infocomm Media Development Authority Singapore, “APEC Privacy Recognition for Processors (PRP)
Certification,” accessed 12 March 2020, http://www.imda.gov.sg/programme-listing/Privacy-Recognition-
for-Processors-Certification.
1.4.2 Incentivise sustainable practices
To encourage adoption of circular practices, there is a need to develop policies that

incentivise businesses to think about the sustainability of their product or service at all
points along the supply chain and across the whole duration of the product life cycle.
Policies that could encourage this thinking are the extended producer responsibility (EPR)
scheme as well as sustainability certificates and labels. The EPR scheme places the
responsibility on producers to manage the disposal or recycling of their products at the end
of their lifespans. Under this scheme, manufacturers are required to contribute to the cost
of collecting, recycling and disposing products at the end of their use. Such schemes create
an incentive for better product designs.35 For example, manufacturers of heavy and bulky
goods like mattresses may consider innovative designs that are more lasting or lighter,
making them easier to recycle. Some economies, France and Japan for example, have
already introduced EPR schemes across a wide range of industries, from electronics to
packaging, footwear and furniture. 36 Overall, this new degree of accountability
incentivises manufacturers to take more serious steps in reducing their environmental
impact.
The EPR scheme has proven to be effective in increasing recycling rates. Japan
implemented an EPR scheme for packaging in 1995, and saw the rate of containers and
packaging being recycled rise by 27 percent between 1997 and 2000.37 EPR also reduced
public and overall spending on waste management and increased product innovation.
France reduced their public spending on waste treatment by 15 percent by 2015. Japanese
PET bottle producers also reduced the use of materials that are difficult to recycle.38
Sustainability certificates or eco-labels incentivise businesses to comply with sustainability

standards so that they can use them in their marketing campaigns. This is especially
effective in markets where sustainability concerns are deepening among consumers, such
as the tourism and cosmetic industries.39 Recognising this, several companies have opened
sustainable lines of products, among them, Nike Considered and Nissan’s LEAF.
1.4.3 Reflect environmental costs in pricing
Environmentally conscious behaviour can also be encouraged through price signals and
financial incentives to improve product designs. In a market economy, prices are supposed
to reflect the full costs of consumption and production, but market prices often do not
capture negative externalities (e.g., pollution or waste), leading to inefficiency. Making
35
McCarthy, Dellink and Bibas, “The Macroeconomics of the Circular Economy Transition.”
36
Nick Oettinger, “Why Extended Producer Responsibility Holds the Key to a Circular Economy,”
Environment Journal (blog), 30 April 2019, https://environmentjournal.online/articles/why-extended-
producer-responsibility-holds-the-key-to-a-circular-economy/.
37
Organisation for Economic Co-operation and Development (OECD), “The State of Play on Extended
Producer Responsibility (EPR): Opportunities and Challenges” (Global Forum on Environment: Promoting
Sustainable Materials Management through Extended Producer Responsibility (EPR), Tokyo, Japan, 2001),
https://doi.org/10.1787/9789264189867-en.
38
OECD.
39
Sara Bom et al., “A Step Forward on Sustainability in the Cosmetics Industry: A Review,” Journal of
Cleaner Production 225 (10 July 2019): 270–90, https://doi.org/10.1016/j.jclepro.2019.03.255; Fabian
Weber, “Demand for Sustainable Tourism,” in Corporate Sustainability and Responsibility in Tourism: A
Transformative Concept, ed. Dagmar Lund-Durlacher et al. (Cham: Springer International Publishing, 2019),
265–81, https://doi.org/10.1007/978-3-030-15624-4_16.
consumers and producers feel the negative impacts of pollution and waste through price
signals – that is, by raising the relative price of unsustainable goods – is therefore an
efficiency-enhancing move. 40 It will also incentivise innovative activity that improves
sustainability. For example, an increase in the price of hazardous materials such as mercury
played a part in the evolution of televisions from liquid crystal displays (LCDs) to light-
emitting diodes (LEDs) that are less reliant on hazardous materials.41
Further, taxing unsustainable activities can be effective in encouraging green practices. 42

The taxes will drive producers to seek or develop lower-cost environmentally friendly
solutions. The numerous taxes imposed on natural resource industries such as crude oil and
natural gas are an example of this policy option. 43 The taxes affect the companies
consuming the non-renewable resources as well, which could encourage them to change
their product content or design.
For products that are especially damaging to the environment, a ban may be more effective.
For example, the US and UK have banned the sale of cosmetics containing microbeads due
to their impact on the marine environment.44 Several other economies are in the process of
implementing similar bans.
APEC could hold discussions and conduct studies on the impacts of these policies and
identify other ways to incentivise greater use of sustainable products. Incentives to develop
greener alternatives could also be encouraged to allow for a seamless shift in production
processes when bans or taxes are imposed on polluting materials.
1.4.4 Encourage collaboration
Collaboration between stakeholders along the value chain is key to the realisation of a
circular economy.45 As profits in the circular economy are defined by improving resource
efficiency, economies are incentivised to find ways to reduce resource use, retain the value
of goods and materials by using them for as long as possible, and minimise waste and other
discarded byproducts in the production cycle. In such a setting, producers and suppliers
would have to collaborate within and between supply chains to ensure optimal resource
efficiency.46
The opportunity for collaboration between companies and industries is significant in this
setting. For example, there needs to be an understanding on the use of waste streams
between companies that exchange waste with one another. Cooperation will make it easier
to determine the necessary infrastructure, regulate quality and maintain databases on
40
Mirjam Bani and Marieke Blom, “Rethinking the Road to the Circular Economy” (January 2020),
https://think.ing.com/uploads/reports/Rethinking_the_road_to_the_circular_economy_FINAL_RB1.pdf.
41
Oettinger, “Why Extended Producer Responsibility Holds the Key to a Circular Economy.”
42
Bani and Blom, “Rethinking the Road to the Circular Economy.”
43
United Nations, United Nations Handbook on Selected Issues for Taxation of the Extractive Industries by
Developing Countries (New York: UN, 2019), https://doi.org/10.18356/4632a533-en.
44
Michael Gove, “World Leading Microbeads Ban Comes into Force,” 19 June 2018,
https://www.gov.uk/government/news/world-leading-microbeads-ban-comes-into-force; US Food and Drug
Administration, “The Microbead-Free Waters Act: FAQs,” 4 February 2020,
http://www.fda.gov/cosmetics/cosmetics-laws-regulations/microbead-free-waters-act-faqs.
45
46
Bani and Blom.
material flows.47 One of the earliest successful examples of industrial collaboration with a
circular approach is the Kalundborg Symbiosis in Denmark, where trust and open
communication were key to success. 48 Stakeholders could also collaborate to develop
objectives that are cross-sectoral rather than industry-specific; for example, it would be
more effective to work toward carbon-neutral cities rather than carbon-neutral cars.49
APEC provides a platform for the private sector and policymakers to collaborate toward a
common goal. Discussions on best practices and lessons learnt from experiences with
industrial collaboration could also be helpful in providing guidance to economies that are
interested in developing such industrial symbioses.
1.4.5 Educate and disseminate knowledge
In order to mainstream the circular economy, there is a pressing need to disseminate

knowledge about the concept and develop ‘nudging’ policies.50 Several economies have
launched green campaigns to prevent the use of single-use plastics, or to encourage
residents to sort their waste and dispose it into the correct bins. Educational campaigns can
also be developed to increase awareness about the circular economy or give people ideas
on how to recycle or reuse a product for some other purpose within their household. The
European Union has organised conferences on reducing plastic use, and developed
platforms to discuss circular economy finance and innovation ideas.51 Nudging policies
aim to alter people’s behaviours without limiting their options or significantly altering the
financial incentives.52 Some of these policies include placing green footprint stickers to
point the way to a garbage bin or branding a clothes-washing detergent with a 30o symbol
to encourage washing at 30 degrees Celsius rather than 40 or 60.53
These efforts can be supported by introducing sustainability courses in the core curriculum
of schools. In Finland, the Finnish Innovation Fund is cooperating with schools at all
education levels to incorporate circular economy thinking and create professionals that will
build a sustainable future.54 In the Netherlands, sustainability courses have been included
in the curriculum. Further, the GreenDeal Schools initiative provides schools with
subsidies to make improvements that advance sustainability policies, like using green
energy and maintaining better air quality.55
47
Het Groene Brein, “What Is Collaboration in the Value Chain?” Kenniskaarten - Het Groene Brein (blog),
accessed 12 March 2020, https://kenniskaarten.hetgroenebrein.nl/en/knowledge-map-circular-economy/ce-
collaboration-value-chain/.
48
Kalundborg Symbiosis, “Kalundborg Symbiosis – The World’s First Industrial Symbiosis,” accessed 12
March 2020, http://www.symbiosis.dk/en/.
49
50
Bani and Blom.
51
Bark et al., “Supporting the Circular Economy Transition: The Role of the Financial Sector in the
Netherlands.”
52
Katrin Recke, “The Potential of Nudging for Greening Economic Governance at EU and National Level,”
https://ec.europa.eu/environment/integration/green_semester/pdf/07_09_2015/4.%20AIM-%20Potential%2
0of%20Nudging%20for%20greening%20economic%20governance.pdf.
53
Recke.
54
The Finnish Innovation Fund Sitra, “Circular Economy Teaching for All Levels of Education,” accessed
12 March 2020, https://www.sitra.fi/en/projects/circular-economy-teaching-levels-education/.
55
Het Groene Brein, “What Can Primary and Secondary Education Do?” Kenniskaarten - Het Groene Brein
(blog), accessed 30 April 2020, https://kenniskaarten.hetgroenebrein.nl/en/knowledge-map-circular-
economy/what-can-primary-and-secondary-education-do/.
APEC, along with other international organisations, can play its part in disseminating
knowledge about the circular economy and in encouraging people to adopt circular
practices. In 2020, Malaysia as the APEC host economy placed the circular economy under
‘Driving Innovative Sustainability’, one of its priority pillars. This shows that APEC
considers the circular economy to be an important factor in pursuing sustainable
development in the region, and is actively seeking ways to improve literacy in and
awareness of the circular economy.
1.5 CONCLUSION
We cannot rely on the Earth’s natural resources to fuel our growth forever. Such resources
are finite and, if not managed sustainably, will run out. Moreover, our production–
consumption behaviours generate an ever-increasing amount of waste, contaminating our
environment. The continued depletion of the resources on the planet and the increasing
waste we generate threaten our future economic growth, and our current health and
standards of living.
The circular economy provides one way to transition away from this unsustainable trend
by optimising current material use, eliminating waste by design, and regenerating natural
systems. A successful transition to the circular economy will need the support of concerted
regional efforts to drive quality policy discussions and encourage the adoption of best
practices. APEC, as a platform for regional cooperation and an incubator of ideas, can
drive these efforts.
2 UNCERTAINTY TESTS APEC’S RESILIENCE AMID COVID-1956
2.1 APEC GDP GROWTH
In 2019, APEC economies had to contend with persistent uncertainty, primarily arising
from trade policy pronouncements that have adversely affected trade relations and
performance. Technology-related tensions and post-Brexit concerns also contributed to
uncertainty, resulting in lacklustre economic activity in 2019 as seen in weaker APEC
gross domestic product (GDP) growth of 3.6 percent compared to 4.2 percent in 2018
(Figure 2.1). The majority of APEC economies slowed down in 2019, showing the extent
of the dampening impact of uncertainty on economic growth.
The moderation in APEC GDP growth in 2019 does not yet factor in the economic fallout
from the COVID-19 pandemic, which has so far infected more 5.4 million people
worldwide, with almost half of that number from the APEC region.57 The pandemic is
expected to translate to a contraction in APEC GDP for the whole year of 2020.
Figure 2.1 Real GDP growth (%), 2018 and 2019
Note: 2019 GDP growth for Papua New Guinea uses estimates from the
Bank of Papua New Guinea.
Source: Economy sources; IMF World Economic Outlook (April 2020);
APEC PSU staff calculations.
The contribution of household consumption, the region’s reliable growth driver, declined
in most APEC economies along with trade, with some economies recording trade deficits
due to a trading environment weakened by tensions and restrictions (Figure 2.2).
Meanwhile, government spending and investments continue to support growth but at lower
levels compared to a year ago.
56
Prepared by Rhea C. Hernando, APEC Policy Support Unit (PSU).
57
Data as of 25 May 2020, COVID-19 Dashboard by the Center for Systems Science and Engineering at
Johns Hopkins University.
Figure 2.2 Contributions to real GDP growth (%), 2019
PCE=private consumption expenditure; GCE=government consumption

expenditure; GFCF=gross fixed capital formation
Note: Data on GDP by expenditures not available for China and Papua New
Guinea.
Source: Economy sources; APEC PSU staff calculations.
The rate of the region’s economic expansion has continued to moderate from the second
half of 2017 when trade-related investigations involving APEC members began, moving
to negative territory in the second half of 2018, coinciding with trade tensions escalating
with the imposition of tariff measures and countermeasures (Figure 2.3). It remains in
negative territory as of the second half of 2019 and will likely see a further drop in the first
half of 2020.
Figure 2.3 Semi-annual real GDP growth (%), 2017–2019
Note: The semi-annual weighted GDP growth rate does not include Papua New
Guinea due to unavailability of semestral data.
2.2 INFLATION AND MONETARY POLICY
Inflation in the APEC region continued to decline, averaging 1.8 percent in 2019 from 2.1
percent in 2018, as prices of major commodities went down (Figure 2.4). Crude oil prices
averaged USD 61.4/bbl58 in 2019 from USD 68.3/bbl in 2018. Prices of some raw materials
as well as metals, particularly aluminium and copper, also decreased by around 56 percent
between 2018 and 2019.59
Figure 2.4 Inflation rate (%), 2018–2019
Muted inflation amid persistent uncertainty prompted the majority of APEC economies to
ease their benchmark interest rates in 2019 while the rest maintained their policy stance in
order to boost spending (Figure 2.5). Similarly, the Monetary Authority of Singapore
signalled a more accommodative monetary policy setting when it adopted a zero percent
per annum rate of appreciation of the S$NEER policy band with no change to its width as
of its 30 March 2020 meeting.
In a series of unscheduled monetary policy meetings on 3 March and 15 March 2020, the
US Federal Open Market Committee (FOMC) cut its target range for the federal funds rate
by a cumulative 2 percentage points to 0.25 percent to counter evolving risks from
COVID-19 that could influence the US economy’s maximum employment and price
stability objectives. All other APEC economies mirrored this easing stance, reducing
monetary policy rates by 0.5–1 percent as of end-March 2020 to boost liquidity and market
confidence amid the adverse impact of the pandemic (Figure 2.5).
58
Average price of Brent, Dubai, and West Texas Intermediate, equally weighed.
59
Commodity prices are sourced from the World Bank’s Commodities Price Data.
Figure 2.5 Monetary policy rate (%), end-2018, end-2019 and end-March 2020
Note: The monetary policy framework in Brunei Darussalam is based on a currency board
system, with the Brunei dollar anchored to the Singapore dollar at par. Hong Kong, China
maintains a currency board system pegged against the US dollar. For Singapore, monetary
policy is conducted through a trade-weighted exchange rate, which is allowed to fluctuate
within a policy band. The operating targets for the S$NEER are expressed in the level, slope
and width of the policy band which determine the direction of monetary policy.
Source: Economy sources.
2.3 TRADE PERFORMANCE
Continued trade tensions, aggravated by tariff measures and other actions that restrict the
free flow of goods and services, have taken a toll on trade growth. Lower commodity
prices, including export goods, as well as the uncertainty in trade policy could have also
contributed to the overall lethargy in trade activity in 2019.
Growth in the volume of merchandise exports significantly decreased, at less than 1 percent
in 2019 compared to the 4.3 percent growth recorded in 2018 (Figure 2.6). Growth in the
volume of merchandise imports turned negative in 2019 after a 4.9 percent expansion in
2018. Meanwhile, growth in the value of merchandise exports and imports reversed to
negative in 2019, contracting by 1.9 percent and 2.9 percent, respectively, from the level
in 2018 (Figure 2.7).
Figure 2.6 Growth in the volume of Figure 2.7 Growth in the value of
merchandise trade (%) merchandise trade (%)
Note: Due to unavailability of data, APEC average trade volume growth does not include Brunei Darussalam
and Papua New Guinea, while APEC average trade value growth does not include Papua New Guinea.
Source: UNCTAD Statistics for trade volume; WTO for trade values; APEC PSU staff calculations.
Merchandise trade performance by the rest of the world (ROW), that is, all other non-
APEC economies, moderated more in 2019 compared to the APEC region. For example,
compared to APEC, the ROW’s value of merchandise exports and imports contracted more
in 2019, by as much as 3.8 percent and 2.8 percent, respectively (Table 2.1).
Figure 2.8 Growth in total services, 2018–2019
Source: WTO.
Table 2.1 Value and growth in merchandise trade, 2018–2019

Value (in billion USD) Growth (y-o-y, in %)
2017 2018 2019 2018 2019
Merchandise Exports
World 17556 19321 18775 10.1 -2.8
APEC 8796 9577 9398 8.9 -1.9
Rest of the World (ROW) 8760 9744 9377 11.2 -3.8
Merchandise Imports
World 17870 19700 19140 10.2 -2.8
APEC 8956 9925 9639 10.8 -2.9
ROW 8914 9775 9501 9.7 -2.8
APEC's share of the World (in %)
Merchandise Exports 50.1 49.6 50.1
Merchandise Imports 50.1 50.4 50.4
Source: WTO.
Table 2.2 Value and growth in trade-in-services, 2018–2019

Value (in billion USD) Growth (y-o-y, in %)
2017 2018 2019 2018 2019
Services Exports
World 5492.6 5982.9 6101.4 8.9 2.0
APEC 2084.0 2261.3 2312.7 8.5 2.3
Rest of the World (ROW) 3408.6 3721.5 3788.7 9.2 1.8
Services Imports
World 5309.5 5714.2 5842.9 7.6 2.3
APEC 2153.4 2310.5 2319.7 7.3 0.4
ROW 3156.1 3403.8 3523.2 7.8 3.5
APEC's share of the World (%)
Services Exports 37.9 37.8 37.9
Services Imports 40.6 40.4 39.7
Source: WTO.
In contrast to merchandise trade, total growth in the APEC region’s trade-in-services

remained in positive territory in 2019, although at lower levels than in 2018 (Figure 2.8).
Together with the APEC region, the ROW also recorded continued growth in the value of
services trade (Table 2.2). The growth observed in trade-in-services globally in 2019
compared to the contraction in trade-in-goods could be largely due to digital technologies
that have facilitated access to the global marketplace and to automated service solutions
with lower costs and barriers to participation. Other factors also play a role, including
demographic trends and rising level of incomes.
2.4 INVESTMENT TRENDS
In terms of global inflows of foreign direct investment (FDI), a preliminary report from
the United Nations Conference on Trade and Development (UNCTAD) shows a slight 1
percent decline in global FDI for 2019 to USD 1,390 billion compared to USD 1,410 billion
in 2018. The value of announced greenfield investment projects, however, has decreased
sharply, by 22 percent to USD 784 billion in 2019 from USD 999 billion in 2018 (Figure
2.9). In addition, the share of greenfield projects in global FDI significantly shrank to about
56 percent in 2019 from 71 percent in 2018. Greenfield investments serve as an indicator
of future trends and a barometer of investor expectations.
Figure 2.9 Global FDI and greenfield investments

(USD billion), 2018–2019
Source: UNCTAD, Investment Trends Monitor, no. 33 (20 January 2020).
Half of the top 10 FDI recipients for 2019 were APEC economies, namely, the United
States; China; Singapore; Hong Kong, China; and Canada (Figure 2.10). Taken in
aggregate, these APEC economies account for an estimated 62 percent of global FDI in
2019.
Figure 2.10 Top 10 FDI hosts, 2019 (USD billion)
Source: UNCTAD, Investment Trends Monitor, no. 33

(20 January 2020).
2.5 TRADE AND INVESTMENT MEASURES
The decline in trade growth is due in large part to an increase in the number of trade-
restrictive measures. During the period covering mid-October 2018 to mid-October 2019,
measures that restrict trade outnumbered measures that facilitate trade (Figure 2.11). This
trend has been going on for quite some time, accelerating during the second half of 2017
and tapering somewhat during the period covered by the latest World Trade Organization
(WTO) report.
Figure 2.11 Trade and trade-related measures

in APEC (actual number), 2016–2019
Source: WTO, “Overview of Developments in the International

Trading Environment, Annual Report by the Director-General”
(2017, 2018 and 2019).
Trade-restrictive measures mostly consist of the initiation of anti-dumping, safeguard and

countervailing investigations, which together account for 80 percent of total trade-
restrictive measures (Table 2.3). The imposition of import tariffs, export duties and other
levies make up the remainder of the measures restricting trade.60
The onset of the COVID-19 pandemic has highlighted trade measures on goods used to
combat the virus. Based on the list compiled by the WTO,61 10 APEC member economies
have implemented trade and trade-related measures amid the COVID-19 pandemic, which
can be generally categorised into: (1) temporary elimination of tariffs and sales taxes for
all medical goods, including testing kits and some food products; (2) temporary export ban
on either the raw materials needed for the production of medical goods or on final products
such as personal protective equipment (PPE), surgical and sanitary masks, and ethyl
alcohol; (3) deferment of custom duties, taxes and fees on medical products; and (4)
temporary exclusion of certain medical and food products from duties, taxes and fees.
60
For a complete listing of trade and trade-related measures implemented during the period mid-October
2018 to mid-October 2019, see Annex 1:
https://www.apec.org/-/media/Files/AboutUs/PolicySupportUnit/2020/Annex-1-Trade-and-Trade-related-
Measures-mid-Oct-2018-to-mid-Oct-2019.docx.
61
The list, compiled by the WTO from official sources, is not exhaustive. See:
https://www.wto.org/english/tratop_e/covid19_e/trade_related_goods_measure_e.htm.
Table 2.3 Trade and trade-related measures in APEC,

mid-October 2018 to mid-October 2019
Number of Measures
Trade-restrictive measures
Initiation/Resumption of anti-dumping investigation 51
Initiation of countervailing investigation/duties 14
Initiation of safeguard investigation/imposition of safeguard measures 16
Increase/Imposition of import tariffs, export duties, levy rates and taxes 10
Reduction/Elimination of tax rebates 1
Imposition of export/import requirements, quotas, bans, restrictions 3
Other trade-restrictive administrative measures 5
Sub-total: Trade-restrictive measures 100
Trade-facilitating measures
Termination of anti-dumping investigation/duties 33
Termination of countervailing investigation/duties 8
Termination of safeguard investigation/duties 5
Reduction/elimination of export duties/import tariffs and taxes 35
Increase in tax rebates 1
Elimination of import/export ban, quantitative and other restrictions 1
Other trade-facilitating administrative measures 0
Sub-total: Trade-facilitating measures 83
Total: Trade and trade-related measures 183

Source: WTO, “Overview of Developments in the International Trading Environment,
Annual Report by the Director-General, mid-October 2018 to mid-October 2019” (2019).
There were only six investment measures implemented by APEC economies who are also
G20 members during the period mid-May 2019 to mid-October 2019. Of those, four were
measures that could be classified as investor-friendly, including relaxing the rules on
foreign exchange quota, and simplifying or clarifying certain procedures to facilitate the
entry of FDI.62
2.6 NEAR-TERM OUTLOOK, RISKS AND OPPORTUNITIES
The APEC region became the epicentre of the COVID-19 pandemic when it struck in early
2020, infecting more than 2.5 million people in the region as of 25 May 2020. The COVID-
19 pandemic, with its rising toll of fatalities, has led to some form of lockdown being
imposed in many jurisdictions across the globe. Such lockdowns have brought global
economic activity to a near-standstill, significantly reducing production and consumption.
The magnitude of the economic fallout is expected to reach unprecedented proportions,
with tremendous uncertainty as to the duration of the pandemic, which suggests an
economic contraction in 2020. The International Monetary Fund (IMF), under an
assumption of pandemic containment by the second quarter and no resurgence in the
second half of 2020, projects a global economic contraction of 3.0 percent in 2020. If the
pandemic persists over a prolonged period, additional reductions in global output by 3.0
percent in 2020 and 8.0 percent in 2021 could be expected.
62
For a complete listing of investment measures implemented during the period mid-May 2019 to mid-
October 2019, see Annex 2:
https://www.apec.org/-/media/Files/AboutUs/PolicySupportUnit/2020/Annex-2-Investment-Measures-mid-
May-2019-to-mid-Oct-2019.docx.
Figure 2.12 APEC GDP growth, actual (2000–2019) and projected (2020–2021) (%)
Source: Economy sources; IMF World Economic Outlook (April 2020); APEC PSU staff
calculations.
Mirroring the projected contraction in global growth, the APEC region is also anticipated
to record an economic contraction of 2.7 percent in 2020, equivalent to an estimated output
loss of USD 2.1 trillion (Figure 2.12). This is worse than the near-zero growth recorded
amid the 2008–2009 global financial crisis.
The sharp economic slowdown across the globe is highlighted by the significant reversal
in GDP projections in a span of just six months. In particular, the APEC Regional Trends
Analysis report released in November 2019 projected that the APEC region would continue
to grow at relatively robust levels, higher than the rest of the world. However, as of this
edition, an economic contraction is expected, with substantial reductions in the 6.2–6.7
percent range compared to the November 2019 forecast (Table 2.4).
Table 2.4 Comparing near-term GDP projections (%)

GDP Projections as of ARTA-Nov 2019 as of ARTA-May 2020 Difference
2020
World 3.4 -3.0 -6.4
APEC 3.5 -2.7 -6.2
ROW 3.3 -3.4 -6.7
2021
World 3.6 5.8 2.2
APEC 3.6 6.3 2.7
ROW 3.5 5.1 1.6
ARTA=APEC Regional Trends Analysis; ROW=rest of the world
Source: Economy sources; IMF World Economic Outlook (April 2020); APEC PSU
staff calculations.
Reflecting the significant downgrade in 2020 as the COVID-19 pandemic grounds global
economic activity to a near-standstill and supply chains are severely disrupted, the WTO
expects world trade to drop substantially, in the 13–32 percent range, in 2020. The wide
range reflects the extreme uncertainty regarding the severity and duration of the pandemic.
A steeper decline is anticipated for sectors with complex value chains, especially
electronics and automotive, while services trade will be also directly affected. Similarly,
the IMF projects trade volume to fall by 11 percent in 2020, before rebounding to 8.4
percent in 2021.
Manufacturing activity is already affected as production stoppages were experienced in the

first quarter of 2020 due to inadequate supply of key components as some factories in
China stopped operations as early as late January in response to the pandemic. Latest
available data on the purchasing manager’s index (PMI) indicate a 6 percent contraction
in the manufacturing sector for the APEC region as a whole from December 2019 to March
2020.
Estimates by the UNCTAD63 point to a reduction in global FDI flows by around 30 to 40

percent for the period 2020–2021 from a combination of demand and supply shocks
adversely affecting earnings and investment decisions. In particular, supply-side factors
such as production stoppages and supply chain disruptions combined with demand shocks
from containment measures and other movement restrictions are expected to result in a
significant decline in global FDI flows.
The sharp pullback in demand coupled with storage constraints has also negatively affected
the prices of oil futures contracts. On 20 April, the price of the West Texas Intermediate
oil futures for the May 2020 contract collapsed to negative territory, plunging to as low as
USD –38 per barrel for the first time in history, while the futures price of Brent crude oil
fell to USD 15 per barrel. The contraction in oil futures prices was recorded amid an earlier
announcement by OPEC that it would cut oil production by 9.7 million barrels a day,
equivalent to about 10 percent of global output. This signals that reduced oil prices could
be expected in the coming months, particularly since the duration of the pandemic is yet to
be determined.
Lower oil prices typically have a direct impact on consumer spending. However, in these
unusual times when some form of lockdown measure is being implemented across the
world, severely scaling back tourism, travel and overall economic activity, reduced oil
prices are not expected to boost consumption, at least in the immediate term. As long as
uncertainty significantly and negatively feeds into consumer sentiments, demand will
remain subdued and the contribution of lower oil prices to economic growth will be muted.
Downside risks have become significant and evidently dominant, owing largely to the
tremendous uncertainty brought about by the COVID-19 pandemic. The magnitude of the
impact to households and businesses, although yet to be quantified, is nevertheless
expected to reach unparalleled levels. The duration of the pandemic remains highly
uncertain, with crucial implications for the severity and length of the lockdowns and the
impact on economic activity. The duration of the COVID-19 outbreak is also dependent
on factors such as the effectiveness of containment measures and the capacity of health
systems, which, in turn rest on economy-specific dynamics. And, while the development
of treatments and vaccines could help in shortening the duration of the pandemic, this
process takes time and costs money.
63
United Nations Conference on Trade and Development (UNCTAD), “Impact of the COVID-19 Pandemic
on Global FDI and GVCs,” Investment Trends Monitor (Special Issue, March 2020).
The IMF forecasts a global economic rebound of 5.8 percent growth in 2021. Similarly,
the APEC region is expected to get back on the recovery track in 2021 with a higher GDP
growth of 6.3 percent.
The economic recovery will hinge on the effectiveness of pandemic containment measures,
and of economic stimulus measures by governments and central banks to revive
businesses, protect incomes and jobs, and fuel economic activity (see Box 2.1).
Box 2.1 Tackling the pandemic through regional cooperation
A health and economic crisis of unprecedented proportions requires unprecedented

fiscal, monetary and macroeconomic support to get back on the path of economic
recovery as swiftly as possible.
As the pandemic raged, APEC economies raced against the rapid spread of COVID-19
to preserve lives and protect livelihoods. Containment measures in the form of
temporary closure of borders, varying forms of lockdown, and other restrictions to
ensure physical distancing were implemented. Parallel to these are measures to counter
the economic fallout from the pandemic.
Fiscal measures ranging from 1 to 20 percent of GDP were rolled out by all 21 APEC
members, complemented by monetary policy measures that saw interest rates declining
significantly while liquidity-enhancing mechanisms were deployed rapidly and
massively. These measures were aimed at bolstering health systems to augment capacity
and supplies while ensuring adequate compensation to health workers; providing direct
aid via cash transfers, unemployment insurance and relief packages to households; and
giving support to businesses, including micro, small and medium enterprises (MSMEs)
through wage subsidies, tax deferrals, loan moratoriums and other forms of financial
assistance.
APEC economies have implemented measures corresponding to their respective

conditions and needs. However, getting back on the path of economic recovery requires
not only a compassionate and coherent policy response, but also a coordinated approach
hinged largely on regional cooperation.
Several important lessons and best practices could be shared among APEC economies
to increase the region’s resilience against any pandemic. This exchange of information
and experiences is emphasised by the APEC Ministers Responsible for Trade in their
latest statement,64 which directs the Senior Officials to work together toward developing
a strategy for collecting and sharing information on policy actions and economic
measures taken to counter the adverse consequences of the pandemic.
All these crucial and credible information could be encapsulated in a pandemic

preparedness policy toolkit that identifies policy options, provides planning guidance,
and facilitates prevention and mitigation of a pandemic through the conduct of up-to-
64
See: APEC, “Statement on COVID-19 by APEC Ministers Responsible for Trade,” 5 May 2020,
https://www.apec.org/Meeting-Papers/Sectoral-Ministerial-Meetings/Trade/2020_trade.
date research and surveillance. For example, a pandemic preparedness checklist could
serve as a starting point for economies to discuss and potentially develop a regional
pandemic policy toolkit. 65 The checklist would identify a range of actions that
economies could consider in preparing for the next pandemic.66 Central to this checklist
is a multisectoral and coordinated approach with specific roles for the government, the
private sector and the general community. In addition, credible and timely information
is an important component of any pandemic preparedness policy toolkit. Building and
enhancing an APEC-wide health database could help in generating informed and well-
targeted policy measures.
APEC could also consider increasing its investment in healthcare access and capacity.
The COVID-19 pandemic has shown how a public health crisis could quickly
overwhelm existing health systems. Data covering the period 2000–2017 show that, on
average, the APEC region’s public health expenditures have stayed below 5 percent of
GDP for almost two decades while household out-of-pocket health expenditures have
doubled. And, for every 1,000 people in the region, there are only 4.1 hospital beds, 1.9
physicians, and 3.9 nurses and midwives.
Keeping open the supply chains for medical and food products especially amid a health
shock could also be part of the APEC region’s commitment going forward. APEC could
also leverage technology to boost health initiatives and make global value chains more
efficient and resilient, by making use of digital tools such as data analytics, algorithms,
and cloud computing, among others.
The immediate policy action that the APEC region could implement is coordinated
stimulus measures to reconnect supply chains and re-fuel economic activity by re-
energising consumer demand, reviving businesses, especially MSMEs, and rebuilding
jobs. These policy stimulus packages should be deployed in a manner that is swift,
significant and coordinated. Only in this way could APEC as a regional forum remain
resilient and relevant.
Source: Based on the APEC Policy Support Unit, “APEC in the Epicentre of COVID-19” (Policy Brief
no. 31, Singapore: APEC, April 2020), https://www.apec.org/Publications/2020/04/APEC-in-the-
Epicentre-of-COVID-19.
2.7 CONCLUSION
The world, particularly the APEC region, is facing a crisis that has affected individuals and
businesses in all sectors and of various sizes. A crisis that is exceptional in its suddenness
and severity should be countered with an arsenal of policy responses that is also
exceptional in terms of swiftness, scale and significance. This kind of response could only
be provided through global and regional coordination.
65
See: Denis Hew, “Preparing for the Next Pandemic,” blog, Asia-Pacific Economic Cooperation, 27 April
2020, http://www.apec.org/Press/Blogs/2020/0427_COVID.
66
The draft pandemic preparedness checklist for APEC can be downloaded here: https://www.apec.org/-
/media/Files/AboutUs/PolicySupportUnit/2020/Annex 3 Proposed APEC Pandemic Preparedness
Checklist.pdf.
In this regard, APEC has an important role to play. Trust and cooperation within a regional
platform are crucial in moving toward economic recovery. Coordinated policy responses
could translate into: (1) the free flow of medical and food supplies along with the exchange
of credible and updated information; (2) improved access to and capacity of health systems,
with APEC economies committing to an appropriate level of public health expenditure,
cognisant of fiscal space; (3) rebound of business and trade activity with substantial
financial assistance across all sectors and sizes of enterprises; and (4) a decisive move
toward digitalisation to catalyse economic activity in the region, keeping in mind that the
pace and sequence of digital reforms should remain appropriate vis-à-vis economy-specific
development conditions.
APEC 2020, a defining moment for APEC as a regional economic platform with the
deadline for attaining its Bogor goals of free trade and investment,67 is at hand. APEC’s 21
member economies should come together in solidarity to recalibrate its regional priorities
in light of the economic fallout from the COVID-19 pandemic.
The APEC Ministers Responsible for Trade took the first decisive step in tackling the
pandemic through regional economic cooperation when they directed the Senior Officials
of the 21 member economies to develop a coordinated approach for collecting and sharing
information on responses to the pandemic. These responses include policy actions and
measures implemented immediately at the onset of the COVID-19 outbreak, fiscal and
monetary support to mitigate the adverse economic consequences of containment measures
as well as the stimulus packages needed to support the economic recovery.68 The exchange
of information and experiences could help guide APEC in translating economy-specific
learnings into best practices for the region as a whole.
The APEC post-2020 vision has become more important than ever. Achieving economic
growth that is sustainable and inclusive remains paramount, but as the pandemic has taught
the world, preparedness in the face of any crisis, pandemic or shock is equally important.
This means bolstering health and social protection systems in the region, as well as
exercising prudent fiscal management and maintaining monetary stability to be able to
deploy substantial emergency measures during episodes of crisis. This also means
enhancing regional cooperation mechanisms to facilitate the free flow of information and
the supply of essential products, as well as to implement coordinated stimulus measures as
needed. The new APEC vision, therefore, should aim to make the forum relevant by being
reflective of the region’s changing conditions and needs, including resilience against any
crisis, shock or pandemic.
67
In 1994, APEC leaders gathered in Bogor, Indonesia and committed to achieve free and open trade and
investment by 2010 for industrialised economies and by 2020 for developing economies. APEC members
agreed to pursue this goal by further reducing barriers to trade and investment and by promoting the free
flow of goods, services and capital.
68
See: APEC, “Statement on COVID-19 by APEC Ministers Responsible for Trade.”

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List of figures iii

1 What Goes Around Comes Around: Pivoting to a Circular Economy .............. 1

2 Uncertainty Tests APEC’s Resilience amid COVID-19..................................... 15

2.1 APEC GDP growth 15

APEC Asia-Pacific Economic Cooperation

I. What Goes Around Comes Around: Pivoting to a Circular Economy

 The COVID-19 pandemic has highlighted the world’s interconnectedness, showing

 The traditional model of economic production follows a linear pattern: resources

 Rethinking business models in terms of the circular economy presents opportunities

 Adopting circular economy principles on a larger scale will have global

 Regional cooperation, and APEC in particular, has an important role to play in

II. Uncertainty Tests APEC’s Resilience amid COVID-19

 A trading environment weakened by tensions, tariff measures and other trade

 The COVID-19 pandemic is a health and economic crisis of unprecedented

 Getting back on the path of economic recovery post-pandemic requires a

 Achieving economic growth that is sustainable and inclusive remains paramount,

Table 1.1 The 9R framework of the circular economy

1.2 BUSINESS MODELS FOR A CIRCULAR ECONOMY

1.2.1 Sharing platforms

1.2.2 Product as a service

PaaS also improves production as it incentivises businesses to develop longer-lasting

1.2.3 Circular supplies

Box 1.1 COVID-19 and the circular economy

To contain the ongoing COVID-19 pandemic, many economies have imposed

1.2.4 Product life extension

1.2.5 Resource recovery

Resource recovery reduces waste by utilising manufacturing byproducts from other

1.3 CLOSING THE LOOP

Figure 1.1 Integrating circular economy models

1.4 POLICIES FOR AN INTERNATIONAL CIRCULAR ECONOMY

1.4.1 Develop standards and definitions

An often-discussed policy gap that hinders the implementation of circular economy

1.4.2 Incentivise sustainable practices

To encourage adoption of circular practices, there is a need to develop policies that

Sustainability certificates or eco-labels incentivise businesses to comply with sustainability

1.4.3 Reflect environmental costs in pricing

Further, taxing unsustainable activities can be effective in encouraging green practices. 42

1.4.4 Encourage collaboration

1.4.5 Educate and disseminate knowledge

In order to mainstream the circular economy, there is a pressing need to disseminate

2 UNCERTAINTY TESTS APEC’S RESILIENCE AMID COVID-1956

2.1 APEC GDP GROWTH

Figure 2.1 Real GDP growth (%), 2018 and 2019

Figure 2.2 Contributions to real GDP growth (%), 2019

PCE=private consumption expenditure; GCE=government consumption

Figure 2.3 Semi-annual real GDP growth (%), 2017–2019

2.2 INFLATION AND MONETARY POLICY

Figure 2.4 Inflation rate (%), 2018–2019

Source: Economy sources; APEC PSU staff calculations.

2.3 TRADE PERFORMANCE

Figure 2.8 Growth in total services, 2018–2019

Table 2.1 Value and growth in merchandise trade, 2018–2019

Table 2.2 Value and growth in trade-in-services, 2018–2019

In contrast to merchandise trade, total growth in the APEC region’s trade-in-services

2.4 INVESTMENT TRENDS