ISLAMABAD: In the backdrop of the escalating global trade tensions, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) has estimated that the region at a minimum, will see a net loss of 2.7 million jobs if the trade tensions are not resolved.

The ‘Trade and Investment Report 2018’ released by ESCAP on Wednesday, says employment losses will be 66 per cent higher for unskilled workers, compared with those for skilled workers. As production shifts take place and resources are reallocated across sectors and borders, tens of millions of workers will see their jobs displaced and be forced to seek new employment.

Those with lower skill sets or who are less mobile — often women — will face a higher risk of unemployment.

Regional integration, accompanied by efforts to simplify and digitalise trade as well as improve the business environment, will be an important factor in creating new economic opportunities.

However, other complementary policies, such as labour and education policies to support people who are negatively affected by trade frictions and integration efforts, must also be placed high on the policy makers’ agenda if the region is to continue its progress towards the Sustainable Development Goals (SDGs).

The report says that US-China trade tensions have also begun to disrupt existing supply chains and dampen investor confidence, as evidenced by the deceleration in trade growth after the first half of 2018.

If the trade tensions remain, export growth may slow to 2.3pc in 2019, compared to a nearly 4pc growth in export volume in 2018.

FDI inflows to the region are also expected to continue in their downward trend next year, following a 4pc drop in 2018.

Tariff hikes that have already taken place are expected to cut global GDP by $150 billion, and regional GDP by a little over $40bn if they remain.

Importantly, as many of the main export industries in the region are relatively labour-intensive, a contraction of export could spell at least temporary hardship for many workers.

The report finds that if the tariff war further escalates in 2019 and investor and consumer confidence drop, global GDP could ultimately be cut by nearly $400bn, also driving regional GDP down by $117bn.

Almost 9m people could be put out of work in the region, with many more workers also moving to new jobs in different sectors.

According to the report, deepening market integration in the region is an effective strategy for minimising the adverse consequences of rising global trade tensions.

ESCAP simulations suggest that, for the region as a whole, regional integration could more than offset the impacts of the ongoing trade war.

With regional integration, even with the “doomsday” trade war scenario, regional employment could actually increase by more than 3.5m jobs, while still falling globally.

Published in Dawn, December 13th, 2018