APEC Growth Outlook 2026–27: Sustaining APEC Momentum Amid Deepening Structural Risks
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure | SDG 17: Partnerships for the Goals
Ministry of Commerce and Industry | Ministry of Finance
The APEC Regional Trends Analysis (ARTA) report for February 2026 mentions that while near-term growth momentum in the region has strengthened, policymakers must manage a landscape of rising trade barriers and sluggish productivity. Estimated GDP growth for 2025 has been revised upward, with the region expanding by 3.4% in the first three quarters and a full-year growth estimate of 3.2%. This resilience is driven by robust merchandise trade and record-high semiconductor billings fueled by AI-related investments. However, the report warns that medium-term stability is threatened by a sharp rise in new tariff and import measures recorded in 2025. While easing inflation has allowed central banks to maintain growth-supportive policies, high trade policy uncertainty and a projected 2026 growth stabilization at 3.1% necessitate a shift toward inclusive structural reforms.
Strategic Pillars of Regional Economic Performance
AI-Driven Semiconductor Surge: Record-high semiconductor billings have been achieved due to massive AI investments, though this has raised significant concerns regarding concentration risks and long-term profitability.
Resilient Merchandise Trade: Global trade remains robust, supported by agile business responses to earlier tensions, even as commercial services trade growth has moderated following the post-pandemic travel surge.
Favorable Commodity Price Shifts: Improved supply conditions have led to a decline in food and oil prices, providing a buffer against inflationary pressures and supporting household demand.
Agile Monetary Management: Easing inflation across the region has enabled central banks to maintain growth-supportive policies while remaining vigilant toward price stability risks.
Inclusive Structural Foundations: Sustainable productivity is increasingly dependent on complementing technology gains with skills development, labor mobility, and reliable infrastructure.
Downside Risks and Upside Opportunities
Sharp Rise in Trade Barriers: A significant number of new tariff and import measures were implemented in 2025, which the report identifies as a primary headwind for medium-term trade performance.
Geopolitical and Account Imbalances: Trade policy uncertainty remains high, compounded by widening current account imbalances and persistent geopolitical risks that threaten to fragment regional markets.
Productivity Gains: There is an upside opportunity if AI investments are successfully paired with reforms that boost sluggish productivity gains, potentially pushing growth beyond the estimated 3.1% for 2026.
Policy Priorities
Leveraging Easing Inflation: Policymakers are urged to use the current window of lower inflation to support growth while maintaining policy credibility and minimizing market uncertainty.
Adaptive Regional Coordination: Strengthening information sharing and institutional adaptability is essential to stabilize the region amid a more fragmented global environment.
Sustainable Productivity Gains: To ensure technology translates to growth, AI must be complemented by competitive markets, labor mobility, and human capital development.
What are “Concentration Risks” in the semiconductor industry? Concentration risks in the semiconductor industry refer to the over-reliance on a small number of geographic regions, companies, or specific technologies (such as high-end AI chips) for global supply. While AI-driven investments have pushed semiconductor billings to record levels, this concentration creates vulnerabilities; any geopolitical disruption, trade barrier, or shift in AI demand could lead to significant regional economic instability and supply chain bottlenecks.
Policy Relevance
By highlighting the sharp rise in trade barriers and semiconductor concentration, the report provides a strategic mandate for the Ministry of Commerce to safeguard India’s export interests while building domestic “Atmanirbharta” in high-tech manufacturing.
Strategic Impact:
Mitigating Trade Barrier Risks: The 2025 surge in global tariffs justifies India’s proactive stance in negotiating bilateral trade deals to bypass regional fragmentation and secure market access for its MSMEs.
Capitalizing on Semiconductor Demand: As global billings reach record highs, the India Semiconductor Mission can leverage these trends to attract fabrication and design investments, specifically targeting non-AI segments to diversify away from concentration risks.
Fiscal and Monetary Synergy: Easing global food and oil prices provides the Ministry of Finance and RBI the fiscal room to prioritize infrastructure spending over short-term consumption subsidies.
Follow the full report here: APEC: Regional Trends Analysis - February 2026