2 weeks Ago By postcourieronline
PAPUA New Guinea , like all APEC regions, is facing significant economic challenges as global conditions evolve. This also includes a shifting global landscape and contends with a mix of economic challenges, including moderating growth, ageing populations, and the need for just energy transitions. Charting a resilient future requires addressing these challenges through the implementation of structural reforms.
Economic and geopolitical headwinds are slowing growth in the APEC region, which is expected to expand at a moderating pace in the coming years, trailing behind the rest of the world. In particular, APEC growth is projected at 3.5 percent in 2024 , declining to 3.
1 percent in 2025 , and further moderating to 2.7 percent over the medium term. Significant risks from soaring debt and geopolitical issues, coupled with heightened uncertainty, could limit growth potential well into the medium term.
Upside opportunities could come from harnessing innovative technologies to boost growth and address these challenges. APEC economies need a balanced mix of monetary and fiscal policies, alongside structural reforms to tackle challenges and enhance growth prospects. In the immediate term, APEC economies should consider gradually adjusting monetary policy rates to support economic growth while remaining flexible to address inflationary risks.
In parallel, a focus on fiscal consolidation is warranted by directing resources toward social programs that uplift lives and sectors that contribute to growth. Implementing structural reforms now is critical to address the great demographic shift and its looming impacts, embrace innovative technologies, and support the green transition, while also tackling skills mismatches as well as sustainability and inclusivity issues. In the face of complex economic challenges, APEC economies can benefit from a cooperative, multilateral approach to shared challenges, particularly by implementing policies toward a balanced growth that benefits all.
Economic and geopolitical headwinds are slowing growth in the APEC region, which is expected to expand at a moderating pace in the coming years, trailing behind the rest of the world. In particular, APEC growth is projected at 3.5 percent in 2024 , declining to 3.
1 percent in 2025 , and further moderating to 2.7 percent over the medium term. Monetary tightening has reduced inflation, but as policy rates adjust to a lower inflation environment, vigilance is necessary to manage exchange rate volatility and preserve macroeconomic stability.
As APEC growth moderates, authorities will have to be cautious about reducing interest rates drastically, as it may result in significant depreciations in local currencies vis-à-vis the US dollar, which in turn could give rise to inflationary pressures. While some maintained a neutral policy stance, a few raised their benchmark rates to counter inflationary risks. The inflation outlook for the APEC region suggests a significant tapering to 2.
9 percent for all of 2024 from 3.8 percent a year ago , further slowing to 2.6 percent in 2025 .
Barring any shocks, inflation in APEC is seen to average 2.4 percent in the medium term. Trade in the APEC region has shown signs of recovery, although protectionist measures and uncertainties could reverse this positive development.
While trade growth forecasts for APEC economies indicate uneven trajectories, the APEC region could expand by 4.4 percent in trade volume next year , in the absence of negative shocks. However, trade activity in the region remains fragile, vulnerable to a host of factors affecting global demand, including trade-restrictive measures, ongoing geopolitical tensions, and economic growth prospects.
Innovative technologies have the potential to vastly enhance efficiency and productivity. Maximizing the transformative benefits from digitalization and the green transition requires investing in upgraded physical and digital infrastructure and skills, while also allocating resources to compensate those facing adjustment challenges. In APEC, at least half of the membership are facing rapidly ageing populations, although at varying speeds.
In 2022, over half of APEC economies reported an old-age dependency ratio ranging from 20 elderly to 51 elderly per 100 working-age individuals . This is a striking increase compared to 1990 when the highest ratio in the region was just 19 elderly per 100 working-age individuals ..
