Dissecting Medium-Term Growth Prospects for Asia

IMF Working Papers, August 22, 2025

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Title: Dissecting Medium-Term Growth Prospects for Asia
Authors: Natasha X Che, Federico J Diez, Anne Oeking, Weining Xin
Publication type: IMF Working Papers
Date: August 22, 2025
Summary (as presented): This paper explores Asia-Pacific's medium-term growth prospects using two approaches. First, growth accounting analysis and machine-learning estimation reveal how demographics, capital deepening, productivity, and human capital shaped Asia's growth. Second, an innovative algorithm forecasts growth by matching countries' current conditions with historically analogous periods using Dynamic Time Warping (DTW). Comparing pattern-based forecasts with traditional projections highlights economic convergence and demographic headwinds. Results show that without ambitious reforms, Asia's growth will likely moderate, though remaining the world's fastest growing region. The paper offers data-driven tools for policymakers to identify growth drivers and generate robust forecasts.

Growth accounting analysis and machine-learning estimation are used to quantify contributions of:
- demographics
- capital deepening
- productivity
- human capital
Forecasting approach:
- An algorithm that matches countries' current conditions with historically analogous periods using Dynamic Time Warping (DTW).
- Pattern-based forecasts are compared with traditional projections.

Comparison of approaches highlights:
- economic convergence
- demographic headwinds
Principal conclusion:
- Without ambitious reforms, Asia's growth will likely moderate, though remaining the world's fastest growing region.
The paper emphasizes data-driven tools to:
- help policymakers identify growth drivers
- generate robust forecasts

Ambitious reforms are implied as necessary to sustain higher growth relative to the moderation projected without such reforms.
Policymakers are provided with data-driven tools to prioritize and target reforms by identifying key growth drivers.

Subject: Capital productivity, Economic growth, Growth accounting, Human capital, Labor, Population and demographics, Production, Total factor productivity
Keywords: Asia and Pacific, Asia-Pacific, Capital productivity, demographics, driver estimation, DTW method project growth, Dynamic Time Warping, economic convergence, Global, growth accounting, growth accounting analysis, growth forecasting, Human capital, income group, machine learning, machine-learning estimation, productivity, robust growth forecast, time series, Total factor productivity