Asia resilient, yet risks remain - IMF

Economies in the Asia-Pacific region have shown resilience amid external and domestic challenges so far in 2025, posting stronger-than-expected economic growth in the first half of the year, according to the latest Regional Economic Outlook report of the International Monetary Fund (IME).

- MARIANNE GO

However, the IMF warned that higher US tariffs and increasing protectionism will likely reduce demand for Asian exports and eventually weigh on growth in the near term. Domestically, the IMF added, slowing growth trends and social tensions pose additional challenges.

As such, the IMF stressed, reforms to make economic growth more resil ient and sustainable will be critical, even after noting that regional ec onomic growth in the first half of this year benefited from strong exports, partly due to frontloading in expectation of higher tariffs anda buoyant tech cycle.

Monetary and fiscal policy easing, the IMF said, further supported domestic demand in the region amid globally accommodative financial conditions and US dollar depreciation.

Despite a stronger-than-expected outcome in the first half of the year, the IMF reported that Asia’s GDP growth is expected to moderate somewhat in the second half, resulting in a modestly lower annual growth of 4.5 percent in 2025 compared with 4.6 percent in 2024.

Regional growth is projected to slow further to 4.1 percent in 2026, given the mounting negative effects of higher US tariffs and headwinds to medium-term potential growth. Risks to the regional outlook are tilted to the downside.

Growth figures for the Philippines were projected at 5.4 percent for this year and 5.7 percent in 2026.

The IMF acknowledged that while tariffs are lower than those announced in April 2025 and tentative new trade deals are emerging, the full negative effect of the tariff increases is uncertain and the intensification of trade tensions continues to be a major downside risk for the region.

Similarly, the IMF report said that while trade policy uncertainty has declined somewhat compared to April, it remains high and could weigh on investment and sentiment more than expected.