The Asia-Pacific region's economy grew 3.3% in 2025, exceeding earlier projections of 3.2%. However, recent analysis warned that momentum may be fading. 

Growth is projected to ease to 3.1% in 2026 and moderate further to 3.0% in 2027, as output expansion slows in more than half of APEC economies, according to the latest report by the APEC Policy Support Unit.

The report attributes the weakening outlook to wider disruptions in the Middle East, which has sent oil prices surging by 52.8% since February 2026 from US$68 to US$103.9 per barrel in March, disrupting global shipping and logistics and pushing food prices higher across the region.

"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," said Carlos Kuriyama, director of the APEC Policy Support Unit (PSU).

"It is ordinary households and businesses that are feeling the consequences most," Kuriyama noted.

The report notes that oil and gas make up 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, making the region's energy supply highly vulnerable to geopolitical and supply tensions.

"This pressure extends to food security, as food production may be affected, noting that APEC imports 27% of its nitrogen-based fertilizers from the Middle East," said Rhea C. Hernando, analyst with the PSU.

"Alongside rising fuel prices and shipping disruptions, food prices are also climbing sharply across the region, with prices of vegetable oils, cereal and meat facing the steepest increases as of April 2026."

Trade fragmentation is deepening as shown by sharp increases in the number of trade-restrictive measures such as tariffs, along with trade remedies.

This has contributed to a deteriorating trade outlook, with growth in the volume of merchandise exports projected to significantly decline to 3.3-3.7% between 2026 and 2028 from a strong 7.6% recorded in 2025. 

"We are seeing supply chain pressures intensify across the region as freight costs on intra-APEC routes continue to rise, driven by higher fuel prices and slowing port traffic," said Eldo Simanjuntak, researcher with the PSU. 

Amid multiple challenges, the report suggests that APEC member economies need to strengthen supply chain resilience through harnessing digital platforms and broadening supply chain routes and services, diversify energy sources and invest in infrastructure, and extend practical support for affected households and businesses.