Trade outlook improves after RCEP announcement – UOB

Head of Research at UOB Group Suan Teck Kin, CFA, assessed the recently clinched crucial trade deal.

Key Quotes

“The Regional Comprehensive Economic Partnership (RCEP) is the world’s largest free trade agreement (FTA), covering 30% of the world’s GDP and world’s population, and 27% of the world’s total trade (i.e. merchandise exports and imports) value in 2019. Furthermore, RCEP members produced nearly half of the world’s manufacturing output.”

“Following the inking of the trade agreement on Sunday (15 Nov), the RCEP countries would need to ratify the Agreement for it to come into force, including six ASEAN countries and three non-ASEAN countries. This is expected by next year, 2021.”

“With the broadening and deepening of economic and trade linkages among its members, there will be benefits from lower tariffs, increase in services trade and investment flows from even beyond the region as well as enhanced protections in areas such as e-commerce and intellectual property.”

“RCEP fits right into China’s dual circulation strategy, which capitalizes its large domestic market at the core of the strategy and interacts the domestic market with the external market through trade, investment and capital flows and its manufacturing capability. This will in turn reinforce the growth and economic prospects of RCEP members.”