APEC warns Asia growth slowdown

APEC said on May 21 that growth across the Asia-Pacific is expected to slow over the next two years as higher energy costs and supply chain disruption linked to the Middle East war feed through trade and household demand. The group’s Policy Support Unit said the region grew 3.3% in 2025, above an earlier 3.2% estimate, but now sees growth easing to 3.1% in 2026 and 3.0% in 2027. APEC said output is expected to slow in more than half of its member economies as oil prices, transport costs and food prices rise. The warning adds an official regional forecast to a broader pattern already visible in ports, fish markets and shipping lanes across Asia. ### How much did APEC cut the outlook? The APEC Policy Support Unit said in a May 21 release that the region’s 2025 growth estimate was revised up to 3.3%, but momentum is expected to fade over the next two years. The unit projected 3.1% growth in 2026 and 3.0% in 2027, and said recent shocks had added pressure to trade and prices. (apec.org) APEC said the weaker outlook reflects a jump in oil prices and wider supply chain pressures tied to the worsening conflict in the Middle East. A secondary summary of the report said oil prices surged 52.8% between February and March, from $68 to $103.9 a barrel, though the official APEC release did not include that figure in the excerpt surfaced by search results. (apec.org) ### Where is the strain showing up first? Southeast Asian fishermen are already cutting trips and leaving boats idle as diesel costs rise, according to regional reporting carried by Bloomberg and republished elsewhere. In Thailand and Indonesia, the higher cost of fuel has squeezed operators who must pay crews, ice suppliers and transporters before a catch is sold. (apec.org) Novel Sharma, a seafood analyst at Rabobank, said the war is affecting seafood through “higher energy, freight and supply chain costs.” He said wild-capture fisheries are especially exposed because fuel typically accounts for about 15% to 30% of fishing costs, and said aquaculture is also at risk, particularly Southeast Asia’s shrimp sector, which depends on diesel-powered aeration systems. (bloomberg.com) ### Why does a Middle East war hit Asia-Pacific consumers? The International Monetary Fund said on March 30 that large energy importers in Asia are bearing higher fuel and input costs because a significant share of global oil and liquefied natural gas moves through the Gulf. The IMF said economies dependent on imported oil are finding it harder to secure supplies even at higher prices, while food and fertilizer costs are also rising. (bworldonline.com) The World Bank said on April 28 that energy prices are projected to rise 24% this year to the highest level since Russia’s invasion of Ukraine in 2022. The bank said the Middle East war was sending a severe shock through global commodity markets and would fuel inflation and slow growth. (imf.org) ### Why does the Red Sea matter if the oil shock starts elsewhere? The Red Sea is one of the main corridors linking Asian exporters and importers with Europe through the Suez Canal, and disruption there raises freight costs even when cargo still moves. GIS Reports said the corridor from Suez to Bab el-Mandeb has become an arena of geopolitical rivalry, military competition and geoeconomic influence. (worldbank.org) That description supports a broader inference now appearing in market and policy analysis: shipping disruption is no longer a short-lived detour problem but a recurring cost risk. Other recent analyses have described Red Sea traffic as structurally below pre-crisis levels and global route choices as altered by persistent security threats, though that characterization comes from non-primary analytical sources rather than APEC itself. (gisreportsonline.com) ### What happens next? China is hosting APEC in 2026, and the group has published its May 2026 Regional Trends Analysis through its official publications page. That report, together with later APEC ministerial and leaders’ meetings this year, will provide the next official updates on whether oil prices, shipping disruption and trade flows are easing or worsening across the region. (isdo.ch) (apec.org)