Jakarta (ANTARA) - Economic growth in the APEC region is expected to slow sharply to 2.6 percent this year due to escalating trade tensions and policy uncertainty weighing on investment and trade.
The forecast was made in a new economic report released by the APEC Policy Support Unit ahead of the Ministers Responsible for Trade Meeting in Jeju, South Korea, on Thursday.
While challenges persist, the report highlights the opportunity for member economies to strengthen cooperation and build resilience through structural reforms and open trade.
Economic growth in the APEC region is projected to moderate to 2.6 and 2.7 percent in 2025 and 2026, a sharp drop from the 3.6 percent growth recorded in 2024.
The downward revision underscores the persistent weight of policy uncertainty on the regional economy, especially in areas such as trade and investment. The report also draws attention to mounting structural challenges.
"From tariff hikes and retaliatory measures to the suspension of trade facilitation procedures and the proliferation of non-tariff barriers, we are witnessing an environment that is not conducive to trade," Director of the APEC Policy Support Unit Carlos Kuriyama said.
"This uncertainty is hurting business confidence and leading many firms to delay investments and new product launches until the situation becomes more predictable," he added.
The report shows that economic and trade activity across the 21 APEC member economies has slowed considerably.
APEC's export volume is projected to grow just 0.4 percent in 2025, while import volume is expected to rise by 0.1 percent. This marks a steep decline from 2024, when export and import volumes swelled by 5.7 percent and 4.3 percent, respectively.
Kuriyama emphasized that rising protectionist moves and unfair trade practices—such as increased subsidies—have created an environment where firms are pausing decisions and holding back on cross-border activities.
"What worries us a lot is that all of these uncertainties could affect jobs," he said.
The report also notes that financial markets have reacted to the uncertainty.
The global volatility index spiked to 52 points in April this year, more than triple the 2023–2024 average.
Meanwhile, gold surged to US$3,200 per troy ounce in early May as investors fled to safe-haven assets.
"The global economic picture is highly fragile," Rhea C. Hernando, an analyst with the APEC Policy Support Unit, said.
General government debt across APEC is projected to hit 110 percent of its gross domestic product (GDP) through 2030.
"At the same time, we're confronting long-term demographic shifts, including a shrinking workforce and an ageing population. The fiscal and structural stress is real," Hernando added.
Adding to these concerns, the report highlights a rising wave of discriminatory non-tariff measures, in particular, subsidy measures, distorting trade.
"Fragmented and reactionary trade policies are becoming the norm," said Glacer Vasquez, co-author of the report.
"While some economies pursue trade-facilitating reforms, these are often offset by inward-looking protectionist measures. This divergence is hampering regional cohesion," Vasquez added.
Despite these headwinds, the report emphasizes that the current moment presents a critical opportunity for economies to work together.
Kuriyama urged APEC economies to recommit to cooperation and stability. He noted that restoring confidence in trade requires not only easing tensions, but also expanding into new markets, strengthening supply chain resilience, and improving transparency in trade rules and procedures.
"This is not the time to retreat behind borders. This is the time to double down on cooperation. Through collective action, APEC economies can navigate uncertainty and lay the groundwork for a more resilient, prosperous future," he added.
