Pandemic Exposed Prevailing Inequalities, Environmental Challenges and Digital Economy Threats: Report

Singapore, 16 November 2020. Issued by the APEC Policy Support Unit

COVID-19 has exploited persistent challenges of widening inequalities and environmental damage that have not been adequately addressed, as well as new sets of challenges caused by the acceleration of the digital economy, according to a new APEC Policy Support Unit’s report.

“The region has experienced rapid economic growth in the past thirty years, with 70 percent of the population rising to the well-off group while extreme poverty has almost been eliminated,” said Emmanuel San Andres, an analyst with the APEC Policy Support Unit who co-authored the report.

“However, this has come at the cost of environmental damage and climate change, which make our societies more vulnerable to diseases like COVID-19,” San Andres added. “Meanwhile, the distribution of economic benefits over the past three decades has been far from equal, and now the virus has mercilessly exposed the prevailing social and economic inequalities.”

According to the recently issued APEC Regional Trends Analysis, more than 50 percent of the income gains over the past thirty years have gone to the richest quarter of the population, while the poorest quarter got only four percent. This has had important implications on the distribution of health, education and economic opportunities.

Inequality in access to digital tools and infrastructure has come to the fore as the pandemic necessitated a shift to conducting work, study and daily transactions online. The report highlights the impact of inequalities on efforts to bring COVID-19 under control. While authorities have advised people to stay at home and practice social distancing to slow down the spread of the virus, this is not an option for the poor, many of whom live in cramped spaces and earn daily wages in the informal sector.

“Everyone is affected by the ongoing health and economic crisis, but not to the same magnitude,” explained Rhea C. Hernando, the APEC Policy Support Unit’s researcher and co-author of the report. “The poor, women, the youth, the low-skilled, the disabled, indigenous groups and other vulnerable sectors of society have to contend with a whole range of issues that are threatening their lives and livelihoods.”

Another set of challenges come from the expansion of the digital economy. While digital tools have been beneficial for small businesses in weathering the adverse impact of the pandemic, especially during strict lockdown measures, it brings challenges such as cybersecurity, digital fraud and job precariousness.

“Member economies should allocate the resources needed to build more reliable technological infrastructure and bridge the digital divide,” said Dr Denis Hew, Director of the APEC Policy Support Unit. ”Ensuring access to reskilling and upskilling opportunities will enable more people to participate in the economy and re-ignite innovation that will bring higher productivity and greater economic output.”

The APEC region is expected to contract in 2020 by 2.5 percent, equivalent to an output loss of around USD 1.8 trillion. To build a more dynamic and resilient APEC region, the report recommends that member economies invest in green jobs and infrastructure, ensure equitable access to healthcare, infrastructure, technology, and education and skills development, as well as maximize the potential of the digital economy.

CR:APEC