An intergovernmental group of 21 economies, including the U.S. and China, has warned of a significant slowdown in economic growth due to escalating trade tensions and policy uncertainty.
The Asia Pacific Economic Cooperation (APEC) forecasts that collective growth across member economies will fall to 2.6% in 2025, down from 3.6% in 2024.
Carlos Kuriyama, Director of APEC’s Policy Support Unit, highlighted the growing challenges, citing increased tariffs, retaliatory actions, and non-tariff barriers. “We are witnessing an environment that is not conducive to trade,” he said during a meeting held in South Korea. Kuriyama added that the current uncertainty is affecting business confidence, causing many firms to delay investments and product launches.
The gathering comes amid lingering effects of former U.S. President Donald Trump’s aggressive trade policies, including “reciprocal” tariffs. Although those tariffs have been suspended, uncertainty continues to cloud the global trade landscape.
Kuriyama emphasized the need to rebuild trust in trade through better transparency, stronger supply chain resilience, and clear trade rules.
Former Canadian trade minister Mary Ng echoed this sentiment, telling CNBC’s Squawk Box Asia that businesses need predictable trade agreements to plan and operate effectively. “Governments must create environments that support stability and clear rules,” she said.
Malaysian Trade and Investment Minister Tengku Zafrul Aziz also stressed the importance of dialogue, saying that ASEAN countries support a rules-based multilateral trade system.
Meanwhile, World Trade Organization Director-General Ngozi Okonjo-Iweala warned that worsening U.S.-China tensions could eventually split global trade into two competing blocs—potentially shrinking global GDP by 7% in the long term.
