Economic slowdown in APEC continues, potential threats persist amidst trade advancements
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The Association of Southeast Asian Nations (APEC) region is projected to experience economic growth of around 3.0 percent in 2025 and 2.9 percent in 2026, according to the latest APEC Regional Trends Analysis. This growth rate, while positive, represents a slowdown from previous rates and trails the expected global growth rate of 3.4 percent in 2026.
The key challenges for economic growth in the APEC region in the coming years include cooling growth due to weaker demand, policy uncertainty, geopolitical tensions, elevated debt levels, and lingering trade system challenges. South Korea's growth outlook exemplifies these challenges, with its forecast halved to 0.9 percent in 2025 amid uncertainties such as U.S. tariff measures and global volatility.
However, there are also opportunities for the APEC region to drive new economic momentum. Harnessing artificial intelligence (AI) and fostering structural shifts toward productivity-enhancing sectors are seen as key opportunities. APEC is promoting AI innovation for trade facilitation and sustainable trade growth, as well as deeper regional cooperation and policy reforms to adapt to global changes.
The establishment of the APEC Sub-Fund for Future Generations, aiming to support young people’s participation through capacity building in emerging digital technologies and fostering startups, also represents a forward-looking opportunity to build inclusive and resilient growth.
On trade and investment, the region has seen some early gains due to businesses accelerating shipments ahead of new trade restrictions. However, sustained expansion depends on multilateral trade system reforms, consistent policy adaptation, and investment in connectivity and sustainability. The APEC Ministers emphasize the need for WTO reforms and collaboration to boost the multilateral trading system’s relevance and responsiveness.
In sectors such as tourism and hospitality, signs of growth continue with strong hotel development pipelines across key cities in China and other APEC economies, reflecting continued investment in services that can contribute to economic resilience and job creation.
The following table summarises the key challenges and opportunities for APEC economic growth in 2025-26:
| Challenges | Opportunities | |---------------------------------------------------|-------------------------------------------------------------| | Weaker demand and slower growth projections | AI-driven innovation and productivity gains | | Policy uncertainty and geopolitical tensions | Policy reforms and deeper regional cooperation | | Elevated debt and legacy pandemic impacts | Support for youth-led innovation and startups | | Lingering global trade system challenges | WTO reforms and sustainable trade facilitation | | Risk of new tariffs (e.g., semiconductor sector) | Investment in connectivity and greenfield productivity projects | | Slower growth in key member economies (e.g., Korea) | Growth in services sector, including hospitality development |
This nuanced picture shows that while the APEC region faces significant headwinds, concerted efforts on AI, trade reform, regional cooperation, and youth empowerment create avenues for reigniting sustainable economic growth.
- Businesses in the Philippines, leveraging AI technology and productivity-enhancing sectors, could spearhead new economic growth opportunities within the APEC region, as outlined in the APEC Regional Trends Analysis.
- In line with the APEC Sub-Fund for Future Generations, finance for education and self-development in digital technologies could foster startups and innovation among Filipino youth, contributing to a more resilient and inclusive economic future.
- Given the region's focus on sustained expansion and multilateral trade system reforms, the finance and technology industries in the Philippines could benefit from investing in connectivity and sustainability to adapt to global changes, ensuring continued growth amid policy uncertainty and geopolitical tensions.
