Key messages are:
- APEC GDP grew at a slower pace of 4.2 percent in Q3 2021 following a strong rebound of 10.1 percent in Q2 2021, reflecting the impact of the Delta variant that prompted a re-imposition of movement restrictions amid a surge in infections. This translated into disruptions in supply chains and reduced consumption, slowing down economic activity.
- The APEC region is estimated to have expanded by 5.8 percent in 2021, lower than the 6.0 percent forecast in the November 2021 APEC Regional Trends Analysis (ARTA). APEC is expected to moderate further to 4.2 percent in 2022 and 3.8 percent in 2023 as multiple challenges derail global economic recovery.
- The emergence of the more contagious Omicron variant has exacerbated supply chain disruptions and sustained fears of new mutations. Compounding these concerns is rising inflation as supply shocks combine with strong pent-up demand. Higher inflation has already driven some economies to tighten monetary policy settings, which could have a dampening effect on economic activity. The moderation in China’s growth could also adversely affect its economic partners within the APEC region
- As challenges multiply, priority should remain focused on boosting health systems, ramping up vaccination rates and addressing vaccine hesitancy. Amid rising debt, fiscal policy should be targeted toward vulnerable households and viable businesses. At the same time, monetary policy needs to be communicated clearly to anchor inflation expectations, while remaining agile and able to immediately deploy tools at its disposal to rein in inflation.
- Global and regional cooperation mechanisms continue to play an important role in recovering from the chaos wreaked by the pandemic and rebuilding stronger economies. The APEC region’s Aotearoa Plan of Action (APA) is the right vehicle that comes at the right time. The APA implements the Putrajaya Vision of ‘an open, dynamic, resilient and peaceful Asia-Pacific community by 2040, for the prosperity of all our people and future generations’ by setting out individual and collective actions under three economic drivers: trade and investment; innovation and digitalization; and strong, balanced, secure, sustainable and inclusive growth.