Suzhou (TDI): The Asia-Pacific region’s economic momentum is fading, according to a new report released on Thursday by the APEC Policy Support Unit.
Surging oil prices, deepening trade fragmentation, and tightening government finances are piling pressure on households and businesses across the 21 member economies.
The region’s economy grew 3.3& in 2025, exceeding earlier projections, but growth is now forecast to ease to 3.1% in 2026 and slow further to 3.0% in 2027, with output expansion decelerating in more than half of APEC economies.
The primary culprit is upheaval in the Middle East. Oil prices have surged 52.8% since February 2026, climbing from USD 68 to USD 103.9 per barrel in March, disrupting global shipping and logistics and driving food prices higher across the region.
Oil prices are up 52.8 percent since February 2026, decreasing growth across the Asia-Pacific. Increased energy and food prices and supply chain pressures mean APEC economies must cooperate. Read more: https://t.co/gm2XViXOpr pic.twitter.com/rq4j9dejfq
— APEC Secretariat (@APEC) May 21, 2026
The vulnerability is structural: oil and gas account for 49%of APEC’s energy mix, with the region importing more than 45% of its crude oil and 23% of its gas from the Middle East.
APEC imports 27% of its nitrogen-based fertilizers from the Middle East, and alongside rising fuel costs and shipping disruptions, food prices are climbing sharply, with vegetable oils, cereals, and meat facing the steepest increases as of April 2026.
Trade is also under stress. Sharp increases in trade-restrictive measures such as tariffs have contributed to a deteriorating trade outlook, with growth in merchandise export volumes projected to fall significantly to between 3.3 and 3.7% from 2026 to 2028, down from a robust 7.6% recorded in 2025.
Read More: APEC Economies Push for Freer Trade Ahead of Suzhou Ministerial
APEC PSU Director Carlos Kuriyama struck a cautionary note. “The region enters 2026 with short-term resilience intact, but knock-on energy price shocks, weakening demand, intensifying supply chain disruptions, and narrowing space to respond to economic shocks are casting a longer shadow over the medium-term outlook,” he said.
On inflation, the region is holding up better than much of the world. Average inflation across APEC is projected to rise from 2.4% in 2025 to 2.9% in 2026, but remains well below the global average of 4.4%
Still, Kuriyama warned that mounting public debt is narrowing governments’ ability to cushion future shocks. “Higher cost of living for families, shrinking margins for businesses, slower job creation and growing uncertainty for economies — these are already being felt across the region,” he said.
The report recommends that APEC member economies diversify their energy sources, strengthen supply chain resilience through digital platforms, broaden shipping routes, and extend practical support to affected households and businesses.
