Asia’s Next Growth Story

IMF Blog, September 2, 2026

Source details

Publication date: September 2, 2026.
Theme: How policymakers can seize new opportunities to renew Asia’s economic growth as underlying forces shift (trade fragmentation, energy security concerns, aging populations, slower productivity gains).
Geographic focus: Asia broadly, with emphasis on Southeast Asia’s economies and how they illustrate choices shaping the region’s future.
Central framing: Asia’s past ascent made it indispensable to the global economy; the next growth story emphasizes resilience and renewal.

Drivers highlighted:
- Artificial intelligence and digitalization as new growth enablers.
- Deeper regional integration as a pathway to scaling gains from technology and trade.
- Demographic variation: some economies benefit from expanding labor forces; aging economies can use technology to offset demographic drag (example: Japan and Korea).
Structural challenges:
- Trade fragmentation and a more unpredictable geoeconomic landscape.
- Energy security concerns.
- Harder-to-sustain productivity gains.
- Social and political tensions where economic gains have not translated into secure work and upward mobility (captured by the observation that “prosperity on the dashboard coexists with anger on the street”).

Core concern: Protecting the “aspiring middle” and restoring trust between state and citizens.
Labor and inclusion insights:
- Informal workers (examples: street vendors, construction workers, ride-hailing drivers) are central to daily economic activity.
- AI-enabled technology can improve outcomes for informal workers, but regulatory measures must be tailored to informal work rather than importing rules designed for formal employment (point made by Anthony Tan, co-founder of Grab).

Trends:
- Asia’s “pragmatic pivot” away from the US dollar for trade toward local-currency settlement, digital payments, and tokenized finance (as examined by Dong He).
- The region’s digital finance revolution has made payment systems faster and cheaper (observation by Sethaput Suthiwartnarueput).
Policy imperative: Build guardrails to ensure resilience and trust in fast-evolving payment and tokenized finance systems when faced with fraud or failure.

Strategic orientations:
- Move toward pragmatic, coordinated regional policies: align industrial policies, collaborate to scale up AI development, and deepen ties with other middle powers (argument by Ben Bland).
- Advocate for flexible, “multilateral-enough” coalitions with aligned incentives to manage an evolving global order (argument by Danny Quah).
Neighbor dynamics:
- India: facing structural constraints that limit growth (analysis by Duvvuri Subbarao).
- China: technology-led growth is a powerful engine but requires more balanced growth supported by stronger domestic demand and services consumption (analysis by Yanliang Miao).

Protect the aspiring middle through policies that translate growth into secure work and upward mobility.
Pursue structural reforms that generate better jobs and nurture trust between state and citizens.
Tailor regulation for informal work when introducing AI and digital platforms.
Strengthen guardrails for digital payments and tokenized finance to maintain resilience and public trust.
Deepen regional integration and coordinated industrial policies to scale AI and technology adoption.
Build pragmatic, multilateral-enough coalitions and deepen ties with middle powers to manage a fragmented global trade and geoeconomic landscape.

The next phase of Asia’s growth is characterized by resilience and renewal, driven by deeper integration, inclusive technology, and pragmatic cooperation.
With appropriate policy choices, Asia can shape not only the recent past but also the future of the global economy.

Source: Asia’s Next Growth Story, Gita Bhatt, September 2, 2026.

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