International Chamber of Commerce-Bangladesh observed that regional integration among the South Asian nations is a must for increased trade and investment to achieve sustainable growth.
Strengthening regional integration for trade facilitation is particularly crucial for fostering economic diversification and transformation, increasing resilience to global economic shocks, and generating significant economies of scale through the widening of markets, according to the editorial of the current news bulletin of ICCB released on Tuesday.
Citing a World Bank study, the ICCB said that South Asia is one of the most dynamic regions in the world. But the region is one of the least integrated and intra-regional trade accounts for only 5 per cent of South Asia’s total trade, compared to 25 per cent in ASEAN.
The ICCB identified high trade costs and investment restrictions and insufficient policy-relevant analytical work on gains of both trade and investment as the main reasons behind less integration of the region.
After leading global growth for two years, South Asia has fallen to second place, after East Asia and the Pacific, due to temporary shocks and longer-term challenges slowing down growth, the ICCB news letter said.
The news letter forecasted that regional economic growth might be slowed to 6.9 per cent in 2017 from 7.5 per cent in 2016, but growth could rebound to 7.1 per cent in 2018 with the right mix of policies and reforms.
It said that trade facilitation has a direct impact on trade costs and an indirect impact on the price of traded goods; it increases trade flows and ultimately leads to higher growth.
‘Regional integration impacts on trade facilitation in several ways as it helps in inclusive growth and poverty reduction, reallocate capital and labour toward sectors holding comparative advantage,’ the news letter read.
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