APEC Lowers Inflation Growth Forecasts, Ukraine Risks | Business and Economy

Intergovernmental Forum forecasts growth of 2.5 percent in 2022, from 3.2 percent in May.

Asia-Pacific Economic Cooperation (APEC) has lowered its economic growth forecast for the region, citing risks such as rising inflation, the war in Ukraine and new mutations from COVID-19.

The APEC region is expected to grow by 2.5 percent in 2022 and 2.6 percent in 2023, according to the latest forecast released Friday by the APEC Policy Support Unit.

The forecast marks a sharp decline of 3.2 percent and 3.4 percent respectively in May.

The outlook comes after the International Monetary Fund and the Asian Development Bank lowered their forecasts for the Asia-Pacific region last month.

“The sharp declines in economic growth for China and the US along with an expected contraction in Russia weighed on the outlook for the APEC region,” said Rhea C Hernando, senior researcher at the APEC Policy Support Unit.

The APEC policy think tank said inflation across the region reached 5.4 percent in January-June — the highest since the height of the global financial crisis — as a result of rising global food and energy prices.

Governments should prioritize taming inflation to keep the cost of living stable and reduce the risk of poverty, the think tank said.

“Inflation is not only high, but it is also broad-based, which especially hurts poor households and small businesses,” Hernando said.

“We expect global inflation to remain high for the remainder of this year and to decline in 2023 as aggressive monetary tightening takes effect. Inflation could return to pre-pandemic levels by 2024.”

Denis Hew, director of the APEC Policy Support Unit, said the region’s economies should focus on improving “sustainability and inclusiveness” to increase their medium- and long-term economic resilience.

“This means strengthening the region’s connectivity, protecting the environment and mitigating the harmful effects of climate change, tackling the digital divide with updated rules, as well as improving digital infrastructure and skills and increasing women’s participation in the economy,” Hew said.

APEC was established in 1989 as an intergovernmental forum to promote free trade in the Asia-Pacific. The forum is made up of 21 economies in North America, Asia and Oceania, including the United States, Japan, South Korea, Indonesia and Australia.

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