APEC Growth Outlook Improves to 3.4% Despite Rising Risks

The APEC region is projected to grow 3.4 percent in 2026, up from an earlier forecast of 3.2 percent, as strong technology investment and trade help sustain economic activity despite rising energy prices and geopolitical tensions.

Growth is expected to slow to 3.1 percent in 2027 as economic pressures mount, according to the latest report released by the APEC Policy Support Unit.

“Growth in the APEC region has remained resilient, supported by strong technology-related investment and trade, but the economic environment is becoming more challenging,” said Carlos Kuriyama, Director of the APEC Policy Support Unit.

 “Higher energy costs, geopolitical tensions, a rising number of trade-restrictive measures and tighter financial conditions are creating pressures that could weaken growth in the near-term,” Kuriyama added. “Economies need to build on the current momentum while diversifying their sources of growth and strengthening resilience to future shocks.”

Merchandise trade has provided a significant boost. In the first half of 2026, export values surged 22.5 percent year on year, compared with 6.5 percent a year earlier. Export volumes increased 10.8 percent, supported by strong semiconductor demand.

Trade growth is expected to slow as geopolitical disruptions and trade policy uncertainty persist. Export volumes of goods and services are forecast to grow 6.9 percent in 2026 before moderating to 3.8 percent in 2027.

Rising energy prices are adding to inflationary pressures. Since July 2026, crude oil prices have climbed 35.9 percent, liquefied natural gas prices 40.2 percent and coal prices 14 percent, increasing costs for businesses and households.

Inflation is projected to reach 3.2 percent in 2026 before easing to 2.8 percent in 2027. More than a third of APEC economies have raised benchmark interest rates in recent weeks to contain price pressures.

“Higher energy and food prices are squeezing household purchasing power and increasing business costs,” said Rhea Crisologo Hernando, analyst with the APEC Policy Support Unit. “Policymakers face the challenge of managing inflation while supporting economic activity.”

Higher sovereign bond yields and public debt, projected at 108–112 percent of GDP in the near term, are also limiting governments’ room to respond to economic shocks.

The report warns that the benefits of technology investment could be uneven, with economies lacking the infrastructure, financial resources and skills needed to adopt new technologies at risk of falling behind.

“Technology investment offers opportunities for productivity growth, but the benefits are not guaranteed or equally shared,” said Eldo Simanjuntak, researcher with the APEC Policy Support Unit. “Strengthening skills and investment capacity will be important to ensuring broader participation in technological progress.”

The report calls for prudent economic management, diversified investment and energy sources, open trade and stronger regional cooperation to sustain growth and manage risks.

Read the APEC Regional Trends Analysis – November 2026.