Economic Growth in Asia and the Pacific Slows Down Amidst Trade Uncertainties

Strategic Insights -

Regional economic growth is expected to decelerate sharply to 2.6 percent in 2025 and 2.7 percent in 2026, down from 3.6 percent in 2024, according to the Asia-Pacific Economic Cooperation (Apec) Policy Support Unit. The report highlights the impact of escalating trade tensions and lingering policy uncertainties on the economic outlook for Asia and the Pacific. Business confidence is hurt by the uncertainty, leading firms to delay investments and new product launches until the situation becomes more predictable.

Key Takeaways:

  • Regional economic growth is expected to decelerate sharply to 2.6 percent in 2025 and 2.7 percent in 2026.
  • Export growth is expected to plummet to just 0.4 percent in 2025, compared to 5.7 percent last year.
  • Import volumes are projected to inch up by a meager 0.1 percent, a drastic slowdown from the 4.3 percent growth in 2024.
  • The Philippines posted a 5.4-percent gross domestic product (GDP) growth in the first quarter of 2025, but officials are banking heavily on domestic demand to fuel momentum.
  • General government debt across Apec is projected to hit 110 percent of GDP through 2030.
  • The rise in 'discriminatory' non-tariff measures, such as trade-distorting subsidies, is a concern.
  • Apec analysts describe these policies as 'fragmented and reactionary' and hampering regional cohesion.
  • The report calls on Apec member economies to realign and refocus through several policy recommendations, such as adjusting monetary and fiscal policies, de-escalating trade frictions, and investing in digital infrastructure.
  • The Apec Policy Support Unit director, Carlos Kuriyama, warns that arising uncertainties could affect jobs due to rising protectionism and opaque trade practices.
  • Development Planning Secretary Arsenio Balisacan of the Philippines believes that even in a scenario where global trade tensions ease, the country may not be ready to seize new opportunities, citing internal economic reforms as necessary.

Statistics:

  • Export growth is expected to plummet to 0.4 percent in 2025, compared to 5.7 percent last year.
  • Import volumes are projected to inch up by 0.1 percent, a drastic slowdown from the 4.3 percent growth in 2024.
  • The Apec report flags a dramatic spike in global market volatility, with its index soaring to 52 points in April.
  • Gold prices surged to $3,200 per troy ounce in early May, signaling a global flight to safe-haven assets.
  • General government debt across Apec is projected to hit 110 percent of GDP through 2030.
  • The Apec report calls for investing in digital infrastructure to fuel regional economic growth.

Sources:

  • Asia-Pacific Economic Cooperation (Apec) Policy Support Unit, "Apec Economic Report 2025"
  • Business Mirror, "Sans tariff war, PH would still be struggling with dev't"
  • Asia-Pacific Economic Cooperation (Apec) Policy Support Unit, "Apec Economic Report 2024" (for comparative data on regional economic growth and trade statistics)