Regional Economic Outlook for Asia and Pacific, April 2025

Regional Economic Outlook, April 2025

Source details

Asia’s near-term outlook has weakened amid rising trade tensions.
Growth in the reference forecast is slowing to 3.9 percent this year from 4.6 percent in 2024.
The downgrade is 0.5 percentage point relative to the October WEO’s projection, the steepest since the pandemic.
Notwithstanding robust growth and inflation largely returning to targets in 2024, the outlook for the region has been downgraded in the near-term in tandem with that for the global economy.

Growth in the reference forecast: 3.9 percent (this year) from 4.6 percent (2024).
Projected regional growth: around 3.9 percent and 4.0 percent in 2025 and 2026, respectively, down from 4.6 percent in 2024 and 4.4 percent in 2025.
The region is both strongly exposed to the shock and faces a larger shock than other regions.

Principal contributing factors to the downgrade:
- Recent tariff announcements by the United States and countermeasures by trading partners.
- Unpredictability accompanying these changes.
- Weaker global demand and reduced trade.
- A soft tech cycle.
- Subdued private consumption.
- Tighter financial conditions and heightened uncertainty.
Risks are tilted to the downside given:
- The region’s greater vulnerability to the uncertain trade environment and weaker-than-expected global demand.
- Asset price volatility increasing the potential for disrupting capital flows and investment.

Policymakers face acute trade-offs requiring careful balance between:
- Near-term support for the economy and external stability.
- Pressing ahead with fiscal consolidation.
Medium-term priorities:
- Stronger domestic demand.
- Productivity gains.
- Deeper regional integration.

Source: Regional Economic Outlook for Asia and Pacific, April 2025