APEC Region's Growth to Slow This Year: Report

Singapore: Economic growth in the APEC region is expected to slow in 2022 amid soaring inflation, a protracted war in Ukraine and heightened uncertainties, on top of the continuing impact of the COVID-19 pandemic, according to a new report by the APEC Policy Support Unit.
 
The APEC Policy Support Unit is now downgrading its gross domestic product (GDP) growth projection for the region to 2.5 percent in 2022, which is lower than its earlier projection of 3.2 percent. 
 
The growth forecast for next year has also been downgraded, from 3.4 percent to 2.6 percent. 

"The expected economic moderation in APEC is in line with lower projections for the global economy. Earlier this week we saw the International Monetary Fund revise downward its global GDP forecast for 2022 to 3.2 percent from 3.6 percent," said Rhea C. Hernando, a senior researcher with the Policy Support Unit, in a press release on Friday.
 
"The sharp downgrades in economic growth for China and the US together with an expected contraction in Russia weighed on the APEC region’s prospects," Hernando said. 
 
Global food and energy prices increased by 23 percent and 60 percent respectively in June compared to a year ago, contributing to a surge in inflation across the APEC region of 5.4 percent for the period of January to June this year. 
 
This is the highest inflation rate the region has seen since 2008 when it hit 6.6 percent at the height of the global financial crisis.
 
"Not only is inflation high, but it’s becoming broad-based, which particularly harms poor households and small businesses," she added. 
 
"We expect that global inflation will remain elevated for the rest of this year and then taper in 2023 as aggressive monetary tightening takes effect. Inflation could return to pre-pandemic levels by 2024," she continued.
 
There is, however, a risk of inflation maintaining its momentum and remaining high for a longer period. 
 
According to the APEC Policy Support Unit’s analysis, the prolonged war in Ukraine could cause another round of supply shocks and price increases, on top of an already tight labor market.
 
Member economies are urged to ramp up crisis management efforts to soften the blow of inflation, uncertainties and virus mutations, especially for the most vulnerable.
 
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