The Asia Pacific Economic Cooperation (APEC) has projected regional economic growth at 3.1 percent in 2026, slightly lower than the 3.3 percent expansion recorded in 2025. This reflects softer prospects in several member economies due to supply disruptions and geopolitical risks, according to the latest APEC Regional Trends Analysis released by the APEC Policy Support Unit.
Short-Term Resilience, Long-Term Concerns
The report indicates that the Asia-Pacific region remains resilient in the short term. However, mounting geopolitical tensions, rising energy prices, weakening demand, and narrowing fiscal space could weigh on growth and trade activity in the coming years. APEC is an inter-governmental forum of 21 member economies in the Pacific Rim that promotes free trade, economic growth, and regional cooperation. The combined output of APEC economies reached approximately US$57.5 trillion, accounting for nearly 60 percent of the entire world's gross domestic product.
Middle East Crisis Exposes Energy Dependence
The report warned that escalating tensions in the Middle East are exposing the region's heavy dependence on imported oil and gas, increasing vulnerability to supply disruptions and price shocks. APEC noted that crude oil and liquefied natural gas prices surged in 2026 as disruptions linked to the Middle East crisis pushed up fuel and freight costs, which in turn contributed to higher food prices. Oil and gas account for 49 percent of APEC's energy mix, with a significant share imported from the Middle East.
The Philippines was identified as among the economies most exposed to oil supply risks, with 95.2 percent of its crude oil imports sourced from the Middle East in 2024.
Supply Chains Under Pressure
The report also flagged worsening supply-chain disruptions despite easing trade policy uncertainty. The Global Supply Chain Pressure Index rose sharply to 1.82 in April 2026 from 0.68 in March, reflecting intensifying logistics bottlenecks and shipping disruptions. Inflation across the APEC region is expected to spike in 2026 as rising energy and transport costs feed into consumer prices, prompting most central banks to maintain a cautious monetary policy stance.
Trade Growth to Slow
While merchandise trade strengthened in 2025 due to strong technology demand and front-loaded shipments ahead of policy changes, APEC said trade growth is expected to slow in the near term as elevated risks outweigh still-resilient demand. The report noted that trade-restrictive measures such as tariffs and anti-dumping actions continue to increase, signaling growing fragmentation in global trade. Meanwhile, freight costs on key intra-APEC and extra-APEC shipping routes have surged amid shipping disruptions and higher fuel prices, while port traffic has begun to decline as shipment volumes weaken.
Rising Public Debt Limits Policy Response
APEC also warned that rising public debt levels are limiting governments' ability to respond to future economic shocks. Gross public debt across APEC economies is projected to increase further to 111.6 percent of GDP by 2027. To mitigate risks, APEC urged economies to accelerate energy diversification, strengthen supply-chain resilience, rebuild fiscal space, and deepen regional cooperation.
