Press Briefing Transcript: Asia and Pacific Department Regional Economic Outlook
IMF News, October 28, 2025
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- Published: October 28, 2025
Overview & headline projections
- IMF press briefing held October 28, 2025, launching the October 2025 Regional Economic Outlook for Asia and the Pacific.
- Regional growth projections:
- 4.5 percent in 2025 (broadly unchanged from last year).
- 4.1 percent in 2026 (moderation).
- The region is projected to contribute about 60 percent of global growth this year and the next.
- Inflation: “quite different across the region”; the briefing did not discuss inflation in detail.
Main drivers of resilience identified
- Three key factors explaining resilience:
- Strong exports, including front-loading of shipments ahead of tariffs.
- Timely and accommodative macroeconomic policies (monetary and fiscal adjustments varied by country).
- Eased financial conditions: booming equity markets, lower long-term borrowing costs, and a weaker dollar.
- Surge in intra-regional trade, partly led by AI-driven technology demand and strong growth momentum within Asia.
Country-specific performance and projections
- China:
- Remained resilient in the first half of the year, driven by fiscal intervention and strong exports.
- Export growth: 4.8 percent this year, forecasted to moderate to 4.2 percent next year.
- Inflation: expected to pick up to 2.7 percent next year.
- Growth expected to moderate in the second half; uncertainty remains high.
- Japan:
- Growth revised to 1.1 percent this year.
- Growth projected to move lower to 0.6 percent next year (close to potential).
- Inflation projected to converge to the BOJ’s 2 percent target by 2027.
- India:
- Projected growth of 6.6 percent this year (broadly unchanged).
- Projected growth of 6.2 percent next year (slight slowing, partly owing to higher tariffs).
- Inflation expected to moderate to 2.8 percent before moving back toward the RBI’s 4 percent target next year.
- GST reform this year expected to offset some adverse impacts of higher tariffs.
- Korea:
- Growth uptick from 0.9 percent this year to 1.8 percent next year.
- ASEAN (Association of Southeast Asian Nations):
- Projected to grow at 4.3 percent this year and next year, supported by export strength and some policy support.
Structural constraints and longer-term concerns
- Asia’s growth remains slower than pre-pandemic averages.
- Identified structural headwinds:
- Aging populations.
- Weaker productivity.
- Economic scars from the pandemic.
- Rising youth unemployment and lack of job opportunities.
- These factors weigh on sentiment and medium-term prospects.
Risks and scenarios
- Trade-policy risks:
- Tariff “dust” has not settled; risk of renewed escalation and geoeconomic fragmentation remains.
- Tariff implementation uncertainty has led to front-loading of trade and tariff exemptions, muting near-term impact but leaving downside risk.
- Financial risks:
- Risk premiums and interest rates could rise again if trade-policy uncertainty or political tensions intensify.
- China-related risks:
- Downside risk from China remains important (property-market weakness, weak domestic demand) but IMF does not single out which single risk (China slowdown vs. U.S. trade barriers) is larger.
Policy recommendations (macro and structural)
- Short-term macro policy:
- Where inflation is at or below target, consider using monetary policy to lower interest rates and temporary, well-targeted fiscal measures to support vulnerable people and firms affected by tariffs.
- Medium-term fiscal policy:
- Upgrade fiscal frameworks to manage future shocks and long-term spending pressures from aging populations.
- Maintain fiscal prudence where high public debt and rising interest payments limit space (explicitly noted for Japan).
- Structural and inclusive-growth policies:
- Rebalance toward domestic demand, especially consumption, via stronger social safety nets and reduced household uncertainty.
- Repair and restructure balance sheets where needed.
- Streamline regulations to enable private sector growth; promote market-based finance (deeper bond and equity markets) and stronger insolvency and debt workout frameworks to boost capital efficiency.
- Exchange-rate policy:
- Greater exchange-rate flexibility seen as a shock absorber; recommended where appropriate to help stabilize economies facing trade shocks (commentary applied to India and China discussions).
Analytical chapters highlighted in the REO
- Chapter on regional trade integration:
- Deeper regional integration could yield sizable gains.
- Policy options include cutting non-tariff barriers, broadening and modernizing trade agreements to cover services and digital trade, and easing restrictions on direct investment in infrastructure.
- Chapter on capital efficiency:
- Need to boost capital efficiencies so that each currency unit invested delivers stronger returns.
- Recommendations: deeper bond and equity markets, broader market-based finance, and stronger insolvency and debt workout frameworks.
Q&A highlights and notable technical points
- Tariff impacts to date:
- Near-term effects muted by announcement delays, pauses, exemptions, and front-loading; negative effects can materialize over time.
- Effective tariff rates and actual tariffs collected can differ, lowering immediate burden.
- AI and financial markets:
- Equity booms linked to AI may be front-loaded; near-term downside risks exist if earnings disappoint.
- Medium-term: AI holds potential for economy-wide productivity gains, especially in healthcare and aging-related services; net effect is two-sided (near-term risk, medium-term gains).
- Japan fiscal advice:
- Fiscal support should be targeted and temporary; broad subsidies and tax cuts should be avoided given high debt and rising interest payments.
- Maintain consolidation path despite recent deficit reductions.
- India exchange-rate regime and rupee:
- IMF noted more two-way flexibility and less intervention under Governor Sanjay Malhotra; formal de facto regime assessments occur in scheduled windows (next Article IV reassessment noted).
- India viewed as well-placed to absorb volatility due to limited balance-sheet mismatches, low pass-through to inflation, and deep FX markets.
- Sri Lanka:
- Growth outlook revised to 3.1 percent (return toward trend after strong rebound).
- Staff-Level agreement reached during the Fifth Review mission in early October; cost-recovery in electricity pricing is a program principle.
- Bangladesh:
- Fifth Review mission is in the field; reserve accumulation by the central bank to reduce balance-of-payments vulnerabilities is welcomed.
- Hong Kong:
- To sustain capital inflows, maintain strengths as an international financial center: strong regulations, human capital, and digital/logistical infrastructure; adapt regulation to new markets and instruments.
Press Briefing Transcript: Asia and Pacific Department Regional Economic Outlook, October 28, 2025.