Credit Tang Yau Hoong
Credit Tang Yau Hoong
Asia is home to more than half of humanity and a large share of global growth, trade, and innovation. Its diversity stretches from Pacific islands to China and India, from sophisticated financial centers to largely agricultural societies. The region influences global debates about development, technology, and power.
Now the forces behind Asia’s ascent are shifting. Trade is fragmenting, energy security is a concern, populations are aging, and productivity gains are harder to sustain. Some nations can still benefit from expanding labor forces, but all must navigate a more unpredictable geoeconomic landscape.
The question for policymakers, then, is how to seize new opportunities to renew Asia’s growth story. As the IMF prepares to hold its annual meetings in Bangkok, this issue examines the choices that will shape Asia’s future, largely through the lens of Southeast Asia’s economies.
The region’s economic potential is immense, says Krishna Srinivasan, the IMF’s Asia-Pacific director. Artificial intelligence, digitalization, and deeper regional integration can open new paths to growth: While younger economies harness expanding workforces, aging ones can use technology to offset demographic drag, as Japan and Korea are doing already.
Aspiring middle
Growth must deliver tangible benefits, however. Recent protests across the region point to a troubling reality: Too many young people do not see growth translating into secure work and upward mobility. Indonesia’s Muhamad Chatib Basri, a former finance minister, captures the tension when he writes that “prosperity on the dashboard coexists with anger on the street.” The priority is to protect the aspiring middle, he says. Governments must also pursue structural reforms that generate better jobs, and above all, nurture the trust between state and citizens.
AI-enabled technology can improve lives for the millions of informal workers—such as street vendors, construction workers, and ride-hailing drivers—who are the backbone of daily economic activity, according to Anthony Tan, co-founder of Grab, Southeast Asia’s largest super app. But policymakers must introduce measures appropriate to informal work, not impose rules developed for formal employment, he argues.
Growth also hinges on the systems that underpin commerce. Dong He examines Asia’s “pragmatic pivot” away from the US dollar for trade as it embraces local-currency settlement, digital payments, and tokenized finance. Sethaput Suthiwartnarueput, a former Bank of Thailand governor, reminds us that Asia’s digital finance revolution succeeded in making payment systems faster and cheaper. The next phase is to build guardrails to ensure that these systems remain resilient and trusted, when faced with fraud or failure.
Policy alignment
Regional cooperation is also being tested. Ben Bland argues that Southeast Asia can no longer rely on the global system of open rules-based trade that helped propel its rise. Instead, the region must become more pragmatic and coordinated by aligning industrial policies, working more closely to scale up AI development, and deepening ties to other middle powers. Danny Quah similarly makes the case for flexible, “multilateral-enough” coalitions with aligned incentives.
Southeast Asia’s giant neighbors face their own challenges. India’s economy is running up against structural constraints, according to Duvvuri Subbarao, a former governor of its central bank. Meanwhile, China’s technology-led growth is a powerful new economic engine, but it requires more balanced growth supported by stronger domestic demand and services consumption, writes Yanliang Miao.
Asia’s impressive growth in recent decades made the continent indispensable to the global economy and lifted hundreds of millions out of poverty. The next growth story is about resilience and renewal. Southeast Asia can point the way through deeper integration, inclusive technology, and pragmatic cooperation. With the right policy choices, Asia can define not only the global economy’s recent past, but also its future.
There is more to explore within the pages of this magazine. We are grateful to be able to share these insights with you. We hope that they reveal something new about the present that helps you better understand our world. Thank you, as ever, for reading and engaging.
To read the full issue, click here (PDF).
