Asia-Pacific region's economy grew 3.3 percent in 2025

Jakarta (ANTARA) - The Asia-Pacific region's economy grew 3.3 percent in 2025, exceeding earlier projections of 3.2 percent, but recent analysis warned that momentum may be fading, according to an APEC statement issued on Thursday.

Growth is projected to ease to 3.1 percent in 2026 and moderate further to 3.0 percent in 2027, as output expansion slows in more than half of APEC economies, according to the latest report by the APEC Policy Support Unit.

The report attributes the weakening outlook to wider disruptions in the Middle East, which has sent oil prices surging by 52.8 percent since February 2026 from USD68 to USD103.9 per barrel in March, disrupting global shipping and logistics and pushing food prices higher across the region.

"The region enters 2026 with short-term resilience intact, but knock-on energy price shocks, weakening demand, intensifying supply chain disruptions, and narrowing space to respond to economic shocks are casting a longer shadow over the medium-term outlook," said Carlos Kuriyama, Director of the APEC Policy Support Unit (PSU).

"It is ordinary households and businesses that are feeling the consequences most," he noted.

The report notes that oil and gas make up 49 percent of APEC's energy mix, with the region importing more than 45 percent of its crude oil and 23 percent of its gas from the Middle East, making the region's energy supply highly vulnerable to geopolitical and supply tensions.

"This pressure extends to food security, as food production may be affected, noting that APEC imports 27 percent of its nitrogen-based fertilizers from the Middle East," said Rhea C. Hernando, analyst with the PSU.

"Alongside rising fuel prices and shipping disruptions, food prices are also climbing sharply across the region, with prices of vegetable oils, cereal, and meat facing the steepest increases as of April 2026."

Trade fragmentation is deepening as shown by sharp increases in the number of trade-restrictive measures such as tariffs, along with trade remedies.

This has contributed to a deteriorating trade outlook, with growth in the volume of merchandise exports projected to significantly decline to 3.3-3.7 percent between 2026 and 2028 from a strong 7.6 percent recorded in 2025.

"We are seeing supply chain pressures intensify across the region as freight costs on intra-APEC routes continue to rise, driven by higher fuel prices and slowing port traffic," said Eldo Simanjuntak, researcher with the PSU.

The report further notes that the cumulative effect of these overlapping economic disruptions is feeding through to inflation.

While price pressures are expected to edge up across the APEC region, with average inflation projected to rise from 2.4 percent in 2025 to 2.9 percent in 2026, the region is still forecasted to remain well below the global average of 4.4 percent.

The outlook highlights both the relative resilience of APEC economies and the importance of continued regional cooperation and agile policymaking to support stability and growth.

"Higher cost of living for families, shrinking margins for businesses, slower job creation, and growing uncertainty for economies, these are already being felt across the region.

Add to these is mounting public debt, which means that economies have limited room to absorb further shocks, making cooperation on energy security, trade resilience, and fiscal stability not just beneficial but essential," Kuriyama said.

Amid multiple challenges, the report suggests that APEC member economies need to strengthen supply chain resilience through harnessing digital platforms, broadening supply chain routes and services, diversifying energy sources, investing in infrastructure, and extending practical support for affected households and businesses.

Through deeper economic cooperation, APEC can help minimize the impact of these pressures and advance shared prosperity across the Asia-Pacific.