WASHINGTON : In its latest Asian Economic Outlook, the IMF underscored that trade remains the backbone of Asia’s economic growth, with China serving as the hub for global supply chains. However, this interdependence has also made Asia particularly exposed to U.S.–China trade tensions and tariffs imposed under former U.S. President Donald Trump’s administration.
The report noted that the ongoing trade disputes, coupled with booming investments in artificial intelligence, have fueled stronger intra-regional trade within Asia. Yet, the IMF cautioned that further action is needed to deepen integration and reduce trade barriers. It urged countries to pursue broader, EU-style trade frameworks instead of relying solely on bilateral agreements, which often create overlapping and inconsistent standards.
Reducing non-tariff barriers, many of which surged during the COVID-19 pandemic and remain widespread, could yield major economic benefits, the report added. Srinivasan, an IMF economist cited in the report, stated that increased regional integration could lift Asia’s GDP by up to 1.4 percent over the medium term, while the economies of ASEAN countries could grow by as much as 4 percent.
Currently, the IMF forecasts Asia’s economy to expand by 4.5 percent in 2025, down slightly from 4.6 percent in 2024. Growth is expected to ease further to 4.1 percent in 2026, weighed down by trade frictions, weak demand in China, and slowing private consumption across emerging markets.
Asia's economic growth is heavily reliant on trade, but the IMF warns that existing barriers and trade tensions pose risks. The organization recommends reducing non-tariff barriers and adopting broader trade agreements to enhance regional integration. This approach could lead to significant GDP growth, despite challenges like weak demand in China and slowing consumption.