Slower Growth in the Asia-Pacific
The Asia-Pacific region continues to show economic resilience, but growth is expected to slow in the coming years. According to the APEC Policy Support Unit, the region grew 3.3 percent in 2025, slightly above previous expectations. However, growth is projected to ease to 3.1 percent in 2026 and 3.0 percent in 2027, as more than half of APEC economies face weaker output expansion.
Energy Costs and Middle East Disruptions
APEC’s outlook links this moderation to rising energy costs and broader disruptions in the Middle East. Oil prices increased from USD 68 to USD 103.9 per barrel between February and March 2026, creating pressure on shipping, logistics and food prices across the region. Since APEC economies import a significant share of crude oil and gas from the Middle East, the region remains exposed to geopolitical and supply tensions.
Food Prices and Trade Pressures
The report also highlights the connection between energy costs, food security and trade. Higher fuel prices and shipping disruptions are increasing the prices of vegetable oils, cereals and meat. In addition, APEC imports a large share of its nitrogen-based fertilizers from the Middle East, which makes food production more vulnerable to external shocks. At the same time, trade fragmentation and restrictive measures such as tariffs are weakening the outlook for merchandise exports.
Inflation and Limited Policy Space
These overlapping pressures are expected to affect inflation and public finances. APEC projects average inflation in the region to rise from 2.4 percent in 2025 to 2.9 percent in 2026, although it would remain below the global average. However, higher costs of living, shrinking business margins, slower job creation and rising public debt reduce the ability of governments to respond to future shocks.
Regional Cooperation and Resilience
Overall, APEC’s analysis shows that regional cooperation remains essential for economic stability in the Asia-Pacific. The report suggests that member economies should strengthen supply chain resilience, diversify energy sources, invest in infrastructure and provide practical support for affected households and businesses. In this context, deeper cooperation can help reduce the impact of external shocks and support shared prosperity across the region.
Reference: APEC. (2026, May 21). APEC sees moderating growth amid rising energy costs and supply chain pressures. https://www.apec.org/press/news-releases/2026/0521_ARTASOM2