ASIA-PACIFIC Economic Cooperation (Apec) economies saw slower expansion in early 2025 as weaker demand and global uncertainty weighed on activity, according to the latest Apec Regional Trends Analysis.
According to an Apec report, growth across the 21-member bloc eased to 3.5 percent in the first quarter from 3.8 percent a year earlier, with early trade gains largely driven by businesses rushing shipments ahead of potential new trade restrictions.
Regional growth is now projected at three percent for 2025 and 2.9 percent in 2026 — above earlier forecasts but trailing the expected global growth rate of 3.4 percent in 2026.
Downside risks remain elevated, marked by policy uncertainty, geopolitical tensions and pandemic-related debt burdens. While new technologies and resilient greenfield investments in productivity-enhancing sectors provide some support, analysts warn that sustained momentum will require consistent reforms and renewed investment in productivity. Average inflation in Apec fell to 2.5 percent in the second quarter, easing pressure on consumers and prompting most central banks to trim policy rates to spur growth.
Others kept rates steady amid potential price pressures and external shocks. Oil prices have inched up due to geopolitical tensions, while food prices have remained broadly stable.
Trade momentum
Merchandise trade, on the other hand, posted strong first-quarter growth, with exports up five percent and imports 7.7 percent in value terms and higher gains in volume. Economists note this was driven by precautionary shipments rather than a sustained demand rebound. Services trade growth, however, slowed to six percent from 11 percent a year earlier, as travel exports decelerated sharply.
Trade policy uncertainty remains above historical norms, keeping gold prices near record highs and boosting demand for safe-haven assets.
Investment, AI potential
While total foreign direct investment inflows declined to US$956 billion in 2024 from $1.16 trillion in 2021, greenfield investments surged 56 percent over the period to $595 billion, reflecting confidence in new capacity and innovation.
Artificial intelligence is seen as a potential productivity booster, with estimates showing gross domestic product gains of 1.3 percent to 3.9 percent if adopted widely. Apec economies score above the global average in AI readiness, but uneven digital skills remain a hurdle to broad adoption.
Policy priorities
Apec officials highlight the need for inclusive reforms, adaptive macroeconomic policies and stronger regional cooperation to balance short-term stability with long-term transformation. They stress the importance of scaling up digital skills, channeling investments into productivity-enhancing sectors and aligning regional responses to global shifts.
“Clear direction and consistent collaboration will be critical to managing risks and supporting durable, innovation-driven growth,” the report said.
Apec is composed of 21 member economies. These include Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Chinese Taipei, Thailand, United States and Vietnam. / KOC