APEC Economies Estimated To Have Grown By 3.5 Pct In 2023
KUALA LUMPUR, March 11 (Bernama) -- The Asia-Pacific Economic Cooperation (APEC) economies are estimated to have expanded by 3.5 per cent in 2023, an increase from 2.6 per cent in 2022, in line with the global economic growth.
In the APEC Bulletin on Monday, the inter-governmental forum said consumer spending was the main driver behind the higher growth in 2023, even as tourism and travel remained strong, while government spending also helped buoy economic activity.
“Gross domestic product forecasts show that APEC will continue to grow in the near term, but at a moderate pace of 3.2 per cent in 2024 and 2.8 per cent in 2025.
“Global challenges are seen to weigh on economic recovery, while APEC economies also have to deal with the lagged effects of monetary tightening and scaled-down fiscal support measures,” it added.
Inflation is expected to average lower at 3.8 per cent in 2023 compared to 5.9 per cent in 2022, due to synchronised and successive monetary policy rate hikes among many economies.
“Inflation in the region is expected to remain on a downward path in the near term at 3.0 per cent in 2024 and 2.6 per cent in 2025, in tandem with slowing global inflation.
“However, authorities need to keep an eye on exchange rate fluctuations, particularly as weaker currencies complicate inflation management and could lead to currency mismatches, affecting payment obligations,” it said.
Between February 2023 and February 2024, the currencies of 17 APEC economies depreciated against the US dollar, ranging from -1.3 per cent to -22.6 per cent.
According to APEC, monetary authorities need to remain on guard as incidents in the Red Sea and the drought in the Panama Canal are affecting shipping routes and freight costs that, in turn, could fuel inflationary pressures.
The latest data (as of Feb 1, 2024) indicated some decline, but still significant compared to the level a year ago, and a prolonged increase in shipping costs -- if the problems persist -- could heighten inflation risk.
While fiscal policies are expected to tighten in 2024 to manage high debt levels, excessive spending cuts could also stifle economic activity, it said.
As such, a collaborative strategy is imperative to help APEC economies effectively address multiple challenges -- post-pandemic economic recovery, geopolitical and geoeconomic fragmentation issues, climate change and building resilience against future shocks.
“In the short-term, there remains a pressing need for monetary authorities to remain watchful against inflationary risks and make timely policy rate adjustments when needed, and for fiscal managers to focus on fiscal consolidation amid rising debt.
“Rebuilding fiscal buffers is essential to adequately prepare for future shocks, however, striking the right balance between fiscal consolidation and supporting economic activity is equally important,” it said.
It said innovation and digitalisation must be integral to APEC’s growth strategy, to bolster productivity, competitiveness and output.
-- BERNAMA
