APEC Regional Trends Analysis, May 2024

GDP GrowthandOutlook InflationandMonetary Policy Risks andChallenges APEC RegionalTrends Analysis Trade Performanceand Outlook GovernmentDebt KEY POINTS Gold demand surgedas a hedge againstintensifying globaluncertainties Near-term inflation expectedto moderate, but supply-sideissues pose a threat APEC GDP expanded by 3.5%in2023,outpacing globalGDP growth at 3.2% Persistent trade route disruptionsand elevated freight expensesremain significant challengesfor global trade UPSIDEOPPORTUNITIES As geopolitical uncertainties heighten and commodityprices fluctuate,the call forenhanced multilateral cooperation resonateslouder than ever ForeignExchangeRate 5.4% depreciation istheaveragedeclineamongAPECcurrenciesagainsttheUSDfrom20April2023to20April2024 17APECcurrenciesdepreciatedagainsttheUSDrangingfrom-2.1%to-16.7% 3APECcurrencies appreciated againsttheUsDrangingfrom0.2%to5.3% Source:EconomysouroesGccaleFinance:APECPsusta'fcalculetions Climate change and geopolitical tensionsdisrupt globaltradeand amplifyinflationaryrisks Increasingbarriersandremediesheightenthethreatofprotectionism Merchandise trade contracts as demandforgoods remains subdued Traveland tourismdrivegrowthincommercialservicesin2023.despite moderatingfromthelevelin2022 APECGeneralGovernmentGrossDebt(%ofGDP)精 Heavy debt could hinder growth,whilestringent fiscal measuresmay curb economic activity and limit reform spending PRUDENTFISCALPOLICY VIGILANTMONETARYPOLICY Prioritise fiscal consolidation and debtsustainabilitywhile rebuildingbufferstosafeguard against future shocks andsupport economic growth Remain onguardagainstnewpricepressures while fostering growth, readyto adjust policy rates accordingly Balanced mix of policies is key to navigating global uncertainties COMPREHENSIVEANDAPPROPRIATESTRUCTURALREFORMS STRENGTHENEDMULTILATERALCOOPERATION Consider key initiatives outlined in theEnhancedAPECAgendaforStructuralReform,APECServicesCompetitivenessRoadmap,andAPECEconomicPolicyReports to boost productivity andgrowthprospects Fostercollectiveactiontokeep tradeopen,ensureglobal stability.andeffectivelyaddresscomplexchallenges Asia-PacificEconomicCooperation(APEC)wasestablishedin1989.The21mermbereconomiesareAustralia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; Korea; Malaysia;Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Russia; Singapore; Chinese Taipei;Thailand; the United States; and Viet Nam. APEc Policy Support Unit (PSU) was set up in 2008 as the policy research and analysis arm for APEC.It supports APEC mermbers and fora in improving the quality of their deliberations and decisions andpromoting policies that support the achievement of APEC's goals by providing objective and high quality APEc Regional Trends Analysis (ARTA) is a serial publicetion of the PSU which provides an Overview ofthe region's economy through an analysis of recent macroeconomic, trade and investrnent trends. It tracksrecent trade and investment measures implemented around the region, and discusses risks andopportunitiestotheregion'seconomic outlook. This report was prepared by Rhea C. Hernando and Glacer Nino A. Vasquez, Analyst and Researcher,respectively.at the PSU.The views expressed in the APEC Regional Trends Analysis are those of theauthors and do not necessarily represent those of the APEC Member Economies. This work is licensedunder the Creative Commons Attributian-NonCommercial-ShareAlike 4.o Intenational License. To view acopy of this license, visit https://creativecammons.org/licenses/by-nc-sa/4.0/deed.en. Asia-PacificEconomicCooperation APEC Policy Supporl Unit ● APEC Secrelarial35 Heng Mui Keng Terrace.Singapore 119616Tclephone Number: (65) 6891 9600 Facsimile Number: (65) 6891 9419Websile: www.apec.org/Aboul-Us/Policy-Supparl-UritEmail: psugroup@apec.org