Issued by the APEC Policy Support
Unit
Dalian, People’s Republic of China, 27 August
2026
The APEC region is forecast to grow 3.2
percent in 2026, supported by strong technology-related
trade and investment, even as higher energy costs,
geopolitical tensions and trade policy uncertainty weigh on
the outlook.
Growth is expected to moderate from 3.3
percent in 2025 to 3.2 percent this year and 3.0 percent in
2027, according to the latest APEC Regional Trends Analysis.
While growth
prospects have been revised up for five APEC economies
and down for six, the overall regional forecast for 2026
remains unchanged, with projections for 10 economies
maintained.
“APEC continues to grow despite a much
more difficult external environment, with technology
investment, trade and digital services providing important
support to the regional economy,” said Carlos Kuriyama,
director of the APEC
Policy Support Unit.
“But the sources of growth
are becoming more concentrated while risks are coming from
several directions at once. Higher energy costs,
geopolitical and trade policy uncertainty, aggravated by
weather-related disruptions could all dampen consumption and
investment. Economies need to strengthen other sources of
growth while making the most of the current
technology-driven momentum.”
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Merchandise exports and
imports rose 18.8 percent and 10.2 percent by value in the
first quarter from a year earlier, respectively, compared
with growth of 5.1 percent and 7.9 percent in the same
period of 2025. Export and import volumes increased 10.8
percent and 11.1 percent, respectively, as demand for
technology products drove trade across the
region.
Inflation across APEC is forecast to
accelerate to 2.9 percent in 2026 from 2.4 percent last year
before easing to 2.5 percent in 2027, as higher food and
transportation costs put renewed pressure on prices.
Increased fuel and insurance costs, together with tight
shipping capacity, have also pushed up freight rates on
several intra-Asia and long-haul routes.
“Central
banks are facing renewed price pressures at a time when
economic growth is expected to moderate,” said Rhea
Crisologo Hernando, analyst with the APEC Policy Support
Unit.
“The challenge is to keep inflation
expectations anchored without unnecessarily constraining
economic activity, particularly when price pressures are
coming from external supply shocks. The persistence and
scale of these pressures will be important in determining
the appropriate monetary policy response,” she
added.
Supply chain pressures have eased from an April
spike, while trade policy uncertainty has fallen
substantially from its 2025 average. The Global Supply Chain
Pressure Index dropped by 56.5 percent between April and
July 2026, while the Trade Policy Uncertainty Index fell to
183.8 points from an average of 543.0 last
year.
Investment is increasingly flowing into
technology and energy. Information and communications,
electronics and energy accounted for 57.6 percent of global
greenfield investment in 2025, nearly 10 percentage points
more than five years earlier, while foreign direct
investment in APEC remained broadly stable.
The
analysis also points to weather as a growing economic risk.
An intensifying El Niño could bring drought, heat stress
and flooding across parts of the region, potentially
reducing agricultural output and adding to food price
pressures. Supplies of key agricultural products remain
broadly adequate, although balances are tightening for
milled rice, oilseeds and vegetable oils.
“The
economic risks we are tracking are increasingly
interconnected,” said Eldo Simanjuntak, researcher with
the APEC Policy Support Unit.
“A weather shock can
affect agricultural production and food prices, while energy
and shipping costs can feed through to businesses and
consumers. Strengthening supply chains, food security and
productive investment will be critical to keeping these
shocks from becoming a broader drag on growth.”
The
report calls for investment in digital infrastructure and
connectivity, stronger supply chains, more resilient
agriculture and early warning systems, and improvements to
the investment environment to support longer-term
growth.
