APEC cuts economic growth forecast

The Asia-Pacific Economic Cooperation on Thursday announced a significant cut in its growth forecast for the region for this year and urged action to eliminate policy uncertainty as trade officials of the bloc began a two-day meeting in South Korea.

Economic growth in the APEC region is expected to level at 2.6 percent in 2025 and to 2.7 percent in 2026, according to a report released by the APEC Policy Support Unit. This marks a sharp drop from the 3.1-3.3 percent growth figures forecast previously in March, and the 3.6 percent actual growth recorded in 2024.

"From tariff hikes and retaliatory measures to the suspension of trade facilitation procedures and the proliferation of nontariff barriers, we are witnessing an environment that is not conducive to trade," said Carlos Kuriyama, director of the APEC Policy Support Unit.

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, he said.

Economic and trade activity across the APEC economies has also slowed considerably, with export volume projected to grow by just 0.4 percent and import volume by only 0.1 percent in 2025, according to the APEC report.

This marks a steep decline from 2024, when export and import volumes grew by 5.7 percent and 4.3 percent, respectively.

In addition, the report highlighted a rising wave of discriminatory nontariff measures, in particular subsidy measures that distort trade.

Challenging environment

The report was released as the 2025 APEC Ministers Responsible for Trade Meeting kicked off in the resort island of Jeju, South Korea, on Thursday. The two-day event is drawing attention as observers expect member economies to exchange views on how to face the challenging global trade environment, especially in the shadow of the United States' tariff policies.

In his opening speech, South Korean Trade Minister Cheong In-kyo said the multilateral trade system is undergoing a test and the role of APEC is more important than ever.

The sharp drop in APEC's growth forecast accounts for what has been happening in the last few months around tariffs, said Siah Hwee Ang, a professor of strategy and international business and professorial chair in business in Asia at the Victoria University of Wellington in New Zealand.

Ang told China Daily that the actual growth may not fall by 1 percentage point after all as economies are becoming more self-reliant and some large ones can sustain production even if trade dips slightly.

"I expect to see more trade facilitation discussion on how APEC economies can work more closely together. There may be a lingering imperative to trade diversification to reduce risk," said Ang.

He said further discussion on other means of cooperation would be more productive at the ongoing APEC meeting. This includes reducing the impact of local content requirements, using trade to tackle domestic challenges and exploring trilateral trade agreements.

The APEC report also said that the current moment presents a critical opportunity for economies to double down on cooperation rather than retreating behind borders.

Restoring confidence in trade requires not only easing tensions, but also expanding into new markets, strengthening supply chain resilience and improving transparency of trade rules and procedures, it said.

kelly@chinadailyapac.com

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