As trade tensions undermine global trade, investment and output, growth in the APEC region is expected to moderate to 3.8 percent in 2019, down from 4.1 percent in 2018, according to the report.
In 2020, gross domestic product (GDP) growth for the region is projected to decelerate further, within the range of 3.5 to 3.7 percent, the report forecasts. However, downside risks may be mitigated if trade frictions ease.
"The upside potential for growth could come from the quick and positive resolution of trade tensions that would significantly reduce policy uncertainty," said Denis Hew, Director of the APEC Policy Support Unit.
The global economy grappled with heightened policy uncertainty in 2018, as economies issued tariffs and counter-measures. Deceleration of GDP growth ensued in parallel to the announcement of trade-restricting measures in the second half of 2017, culminating in the imposition of tariffs and counter-measures in 2018.
Today, trade restrictive measures comprise nearly 60 percent of total trade and trade-related measures, according to the report.
In contrast, for decades trade drove the expansion of the regional economy, from US$23.5 trillion in 1990 to US$63.6 trillion in 2017. The declining influence of trade on the region’s growth is pivotal for APEC.
"Sustaining economic growth amid trade tensions and policy uncertainty is a delicate balancing act. However, it also presents opportunities to pursue more structural reform that encourages growth that is sustainable and inclusive," Hew explained.
The APEC region faces other challenges, such as growing income inequality, greenhouse gas emissions and encroaching climate change, industry-disrupting technology. APEC’s approach to economic policy cooperation, however, can help members navigate cross-border complexities and find solutions.
The APEC 2019 is hosted by Chile, an economy that has thrived largely due to its trade with the Asia Pacific region. In an effort to broaden opportunities, Chile has included the economic empowerment of women and internationalization of small and medium enterprises as regional priorities.