KUALA LUMPUR: Growth in Asia-Pacific Economic Cooperation (Apec) trade bloc will reach 3.4% in 2024 and slow to 2.9% in 2025-2026, according to a recent report.
The Apec Regional Trends Analysis, May 2024 report said the projected economic moderation reflects uncertainty arising from trade protectionism, persistent inflationary pressures and geopolitical tensions.
“Indeed, investors are hedging against intensifying global uncertainty by demanding more gold, reflected in prices that have soared by 17%, from around US$2,050 per troy ounce in January 2024 to about US$2,400 per troy ounce in April 2024,” the report said.
According to the report, high debt levels continue to be a concern, with general government gross debt-to-gross domestic product (GDP) ratios surging during the pandemic and remaining persistently high post-pandemic.
A confluence of factors, including extensive stimulus initiatives and ongoing fiscal support amid economic challenges, have contributed to the elevated debt levels.
It noted that in the Apec region, the ratio has increased significantly to 104.5% of GDP in 2023 from below 100% pre-pandemic.
Hence, Apec’s public debt could go up to 110% of GDP in the near term due to the combined impact of the pandemic’s aftermath and fiscal support packages aimed at assisting vulnerable groups.
“Ongoing uncertainty make it more challenging for economies to fully offset debt incurred during episodes of health and economic crises and return to the pre-pandemic level.
“Despite these challenges, there exists considerable upside potential driven by the resurgence of consumption, increased investment, revitalised tourism and the expected rebound in trade. These factors could help sustain economic growth in the region,” it said.
On another note, the report said inflation in Apec is expected to gradually ease over the short term, from 2.9% in 2024 to 2.5% in 2025 and 2.4% by 2026.
“With inflation showing signs of moderation, the majority of Apec economies have opted to keep their key policy rates unchanged, aligning with the US Federal Reserve’s decision to hold interest rates steady,” it said.
The report also stated that there are bright prospects for trade in the Apec region in the near term.
“Projections paint a picture of robust recovery in 2024, with growth estimates spanning from 0.6% to 12.6% across Apec economies.
“The regional average is estimated to reach 4%, higher than forecasts for global trade. This favourable trend is expected to continue in 2025, underpinned by resilient supply chains and more stable economic growth,” it added.
Apec is an inter-governmental forum for 21 member economies in the Pacific Rim that promotes free trade throughout the Asia-Pacific region.
The trade bloc started in 1989, in response to the growing interdependence of Asia-Pacific economies and the advent of regional trade blocs in other parts of the world.
Headquartered in Singapore, the trade bloc is recognised as one of the highest-level multilateral blocs and oldest forums in the Asia-Pacific region,and exerts significant global influence. — Bernama
