The Asia-Pacific economy grew 2,6 percent in 2022, a decline from 6,1 percent growth in 2021, according to a new report released by the APEC Policy Support Unit.
The region's economy is expected to recover in the near term, with gross domestic product (GDP) projected to expand by 3,1 percent this year.
“The combination of a long-lasting pandemic, high inflation coupled with rising interest rates and debts, as well as ongoing geopolitical issues, resulted in a significant slowdown in the global economy during 2022,” he explained. Carlos Kuriyama, the new director of the Support unit of APEC.
“Both consumers and investors were cautious last year due to uncertainties and a gloomy economic outlook,” Kuriyama continued. “Therefore, demand and investment activities progressed slowly.”
APEC inflation reached 5,8% in 2022. This is the highest inflation rate since the 2008 financial crisis, when it peaked at 6,6%.
The report projects APEC inflation will slow to 3,9 percent this year, and further decline to 2,7 percent in 2024.
“The sustained and widespread increase in prices promoted an aggressive and synchronized response from monetary authorities around the world,” said Rhea C. Hernando, senior researcher in the Policy Support Unit.
“In APEC, we are seeing most central banks raising interest rates to dampen price pressures.” Rising uncertainties also weakened APEC merchandise trade during the first nine months of 2022. APEC merchandise export volume growth was flat, while merchandise imports grew by 4,3 percent compared with the same period last year, when they expanded by 14,4 percent and 16,1 percent respectively. Meanwhile, the value of merchandise trade exports and imports grew by 14,5 percent, showing increased resilience due to relatively high energy prices in 2022, in turn driven by supply shocks.
“We expect modest growth in APEC trade volumes this year, following a slowdown in global demand,” Kuriyama added.
In contrast, trade in commercial services performed better in 2022, with exports and imports growing by 13% and 15,6% respectively in the second quarter of last year. The strong expansion in trade in this sector was driven by travel services, which increased by 60% as economies progressively reopened borders and eased COVID-19 restrictions.
Officials from APEC's 21 member economies are gathering in Palm Springs, California, to kick off the first set of APEC 2023 technical meetings. The United States is the host of APEC this year and will drive the forum’s agenda under the theme “Creating a resilient and sustainable future environment for all.”
“Taking advantage of the upcoming meetings in Palm Springs, member economies should prioritize efforts to coordinate clear and consistent policies,” Kuriyama said. “Coordinated macroeconomic policies play an important role in addressing the rising cost of living.”
“Furthermore, maintaining free, fair and open trade and boosting trade facilitation could significantly reduce pressure on food and energy prices, mitigating the adverse impact on food security and poverty levels,” he added.APEC Regional Trends Analysis, February 2023 Update)
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