COVID‐19, services trade and greenfield investment in ASEAN+6

Abstract

Given the importance of services for economic activity in general and the salience of reducing service link costs for overcoming the economic and health challenges emanating from COVID‐19, we examine the effect of the pandemic on services trade in the original group of ASEAN+6 countries that began negotiating the RCEP agreement. Stylised facts show that ASEAN+6 commercial services’ exports and imports declined by 19.7% and 22.1%, respectively, on a YoY basis during 2020, with considerable heterogeneity across countries and sectors. ASEAN+6 announced greenfield investment in services also fell by a third during 2020, with the intra‐ASEAN+6 decline being more severe at 41.8%. Meanwhile, structural gravity estimates suggest that the stringency of containment measures imposed in the wake of the pandemic may have reduced ASEAN+6 services exports by 61.6%.