The Asia-Pacific Economic Cooperation (APEC) has cut its economic growth forecast for the region, citing risks including inflation, the Ukraine war and new COVID-19 mutations, according to a report by the Policy Support Unit.
The APEC region is forecast to expand by 2,5 percent in 2022 and 2,6 percent in 2023, according to the latest outlook released on Friday (05.08.2022).
This update marks a sharp drop from the 3,2% and 3,4% reported respectively in May. In this regard, Rhea Hernando, Senior Fellow, APEC Policy Support Unit, said: “Sharp downgrades in economic growth in China and the US, coupled with an expected contraction in Russia, weighed on the outlook for the APEC region.”
Inflation across the region reached 5,4 percent in the January-June period, the highest since the height of the global financial crisis, due to rising global food and energy prices, he said.
In this regard, it was suggested that Governments should prioritize controlling inflation to keep the cost of living stable and reduce the risk of poverty. “The inflation Not only is it high, but it is becoming widespread, particularly damaging to poor households and small businesses,” Hernando warned.
He added: “We expect global inflation to remain elevated for the remainder of this year and then decline in 2023 as aggressive monetary tightening takes effect. Inflation could return to pre-pandemic levels by 2024.”
In addition, trade activity in APEC also weakened, with slower growth in the value and volume of merchandise trade (Figures 7 and 8).
Priorities
Denis Hew, Director, APEC Policy Support Unit, recommended immediate-term priorities for economies to manage any crisis and cushion its adverse impact. This involves focusing on improving “sustainability and inclusion” to boost their economic resilience in the medium and long term.
This means strengthening the region's connectivity, protecting the environment and mitigating the harmful effects of climate change, addressing the digital divide with updated rules, as well as improving digital infrastructure and skills and increasing women's participation in the economy," she explained.
APEC was established in 1989 as an intergovernmental forum to promote free trade in the Asia Pacific region. The forum is comprised of 21 economies from North America, Asia and Oceania, namely: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, the United States and Vietnam. (APEC Regional Trends Analysis, August 2022 Update)
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