APEC Region’s GDP Growth Moderates to 5.8% in 2021: Report

Issued by the APEC Policy Support Unit

Singapore, 10 February 2022

The APEC region’s economic growth is expected to have moderated for 2021, hurt in part by the emergence of new variants of COVID-19 as well as elevated inflation from the combined effect of supply shocks and strong pent-up demand.

Gross Domestic Product (GDP) expanded by 5.8 percent in 2021, lower than the earlier prediction of 6 percent, according to a newly updated report by the APEC Policy Support Unit.

“We are dealing with multiple headwinds that derail our push for recovery,” said Dr Denis Hew, the APEC Policy Support Unit’s director. “Adding to that, growth in APEC will remain uneven mostly due to disparities in pandemic management and vaccine coverage. China’s modest economic growth is also expected to have some impact on the economic performance of the region.”

The report notes that the APEC region’s economic growth will continue at a moderate pace in the coming years, expanding to 4.2 percent in 2022 and 3.8 percent in 2023.

Higher inflation poses an additional challenge as it has already driven some economies to tighten monetary policy settings, which could have a dampening effect on economic activity. APEC’s inflation rate doubled to an average of 3 percent in 2021 compared to 1.5 percent in 2020, thanks to higher energy and food prices.

“We expect inflation to moderate to 2.5 percent in 2022, with a further decrease to 2.3 percent by 2023,” said Rhea C. Hernando, a researcher with the APEC Policy Support Unit who authored the report. “Authorities need to continue to anchor inflation expectations with clear monetary policy intentions, and this, along with the stabilization of global and supply conditions, will help bring down inflation.”

The report highlights how public debt around the region has increased to around 65 percent of GDP in 2020, compared to the pre-pandemic 10-year average of 49 percent of GDP. This significant increase is led by the massive fiscal response to cushion the blow of the health and economic crisis brought by COVID-19.

“Governments are faced with the inevitable option to scale back their fiscal stimulus and shift to a more targeted and calibrated approach to continue their support to vulnerable households and viable businesses,” Hernando added. “However, narrowing fiscal space and tightening monetary policy could slow down consumption and overall economic activity.”

Moving forward, the report recommends that APEC economies continue to prioritize the health of the people in the region so that they can recover, reopen and rebuild.

“The message remains more or less the same; safeguard the free and rapid flow of medical supplies across borders to expand vaccination coverage. At the same time, we need to address vaccine hesitancy by focusing the information campaign on highlighting vaccine protection and correcting misinformation,” Dr Hew reiterated. “In addition to this, economies need to ensure the availability of medical and essential workers as they are the key to recovery.”

Thailand, the host of APEC 2022, will lead the region’s effort towards charting a post-COVID-19 future for the Asia-Pacific region that is resilient, inclusive, balanced and sustainable, guided by its theme, Open. Connect. Balance. Thailand will host the first round of technical meetings this February. To view the event calendar, visit this page.

For more information on the APEC Regional Trends Analysis update, visit this page.

 

For further details, please contact:

Masyitha Baziad +65 9751 2146 at mb@apec.org
Michael Chapnick +65 9647 4847 at mc@apec.org

Statement by Prime Minister of Thailand on APEC

Issued by the 2022 APEC Economic Leaders' Meeting Chair

Bangkok, Thailand, 10 February 2022

This year, Thailand is hosting the Asia-Pacific Economic Cooperation forum as the region aims for an inclusive and sustainable recovery in response to the COVID-19 pandemic. Next week, APEC delegates will begin their first set of meetings to roll out the year’s agenda, and advance APEC’s work to implement the Aotearoa Plan of Action agreed last year to achieve the Putrajaya Vision 2040, which guides APEC’s actions for the next twenty years.

The theme of APEC 2022 is “Open. Connect. Balance.” Our priorities are to make APEC open to all opportunities, connect in all dimensions and balanced in all aspects. Thailand’s theme is driven by our vision to address the imbalances revealed by the pandemic and achieve growth through the integration of the Bio-Circular-Green (BCG) model, three well-established economic development approaches, into the region’s economy.

APEC’s work is a long-term pursuit that requires continual and coordinated efforts. Following through on members’ commitments to the Asia-Pacific, I’m delighted to announce that the United States of America will host APEC in 2023 and Peru will host APEC in 2024.

Together, we will fulfill our shared goal of an open, dynamic, resilient, and peaceful Asia-Pacific community for all our people and future generations.

I look forward to welcoming APEC Leaders to Thailand in November when we will set the goals for the region.

For further details, please contact:

Masyitha Baziad +65 9751 2146 or mb@apec.org  
Michael Chapnick +65 9647 4847 or mc@apec.org