Economic Buzz: APEC region expected to expand at 3.1% in 2025, inflation to hover around 2%

Kristalina Georgieva, Managing Director of International Monetary Fund (IMF) has offered an insight into IMF’s latest global economic outlook with Asia-Pacific economic co-operation or APEC region, whose economies together represent about 61 percent of global GDP. She highlighted the resilience of these nations and stated that decades of hard work have resulted in good policy frameworks such as inflation targeting and fiscal rules. Firms across APEC and beyond have quickly adjusted to shocks, with trade and investment frontloading, supply-chain strengthening, and compressed profit margins.

As a result, despite the policy shifts and transformations in geopolitics, trade, technology, and demography, growth has held up so far. IMF forecast for global growth is 3.2 percent this year and 3.1 percent next year, slightly down from the 3.3 percent in 2024. For APEC, the forecast is a bit lower—growth of 3.1 percent in 2025 and 2.9 percent in 2026, down from 3.7 percent last year.

The fund projects global inflation to decline further, to 4.2 percent in 2025 and 3.7 percent in 2026; for APEC, IMF sees inflation hovering close to 2 percent in both years—and staying especially subdued in APEC emerging economies. Global economic prospects will depend on easing trade tensions, the scope and speed of AI’s impact on productivity, the evolution of financial conditions, and how consumers and firms respond to the policy shifts and transformations underway.

However, public debt in APEC to exceed 110 percent of GDP next year, with some APEC members at risk of seeing their debt burdens soon exceeding all-time highs registered after World War Two. This trend must be reversed to reduce borrowing costs and build buffers for the shocks yet to come. The good news is that there are enough policy options available to deliver a positive outcome, she opined.

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