Asia’s Economic Resilience Amid Uncertainty: Can it be Sustained?

IMF Blog, October 15, 2026

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The Asia-Pacific region was described as remaining resilient despite the energy shock and the tariffs and trade restrictions that disrupted supply chains last year.
IMF staff upgraded the regional growth projection for this year to 4.8 percent, from 4.4 percent six months ago.
IMF staff raised the forecast for next year to 4.4 percent, from 4.2 percent.
Asia’s overall growth rate is likely to slow from 5 percent last year, while the region would remain the engine of the global economy, providing two-thirds of global growth.
The largest upgrades are for India, Korea, and parts of Southeast Asia that are benefiting from strong demand along the tech supply chain.
Projections for low-income and Pacific island economies have been revised down, substantially so in some cases.

Adaptation to oil shocks:
- China has been able to draw on oil reserves and reduce demand, including due to greater use of renewables.
- India and Japan have been able to find alternative sources of supply.
- Across Asia, governments have deployed policy measures such as fuel price caps and subsidies to protect households and firms.
AI-related demand:
- A significant AI-related boost in global demand for tech goods and services is supporting growth, seen most prominently in demand for high-end semiconductors and other components, and massive investments in data centers.
Trade dynamics:
- Exports—even of non-tech products—have continued to grow.
- Intra-Asia trade has surged even as commerce with the United States fell.
- Asia-Pacific governments have pursued deeper regional trade agreements and largely resisted restrictive practices.

Oil prices are likely to stay high and volatile for longer than previously expected.
There are limits to adaptation, such as how far crude inventories can stretch.
Fiscal support in many economies is broad based and often untargeted, adding to pressure on public finances.
Yields on sovereign debt have risen sharply around the world, including in Asia, and investors are increasingly concerned about the sustainability of public finances.
While many Asian economies have reduced deficits, some have delayed consolidation amid mounting spending pressure from aging populations, defense commitments, and rising interest bills.
Fuel price impacts:
- Diesel is crucial for electricity generation in low-income countries.
- Jet fuel is essential for air travel, especially to Pacific island countries.
Growth within countries is uneven, with many showing signs of “K-shaped” growth.

The region will need to create nearly 150 million jobs over the next decade.
Manufacturing is becoming increasingly capital intensive, reducing its historical role as an employment generator and increasing emphasis on creating good knowledge jobs in services sectors.
Policymakers face questions on how to create jobs as AI changes which industries are best able to generate them and what kind of education young people need for an AI-driven labor market.

Analysis of millions of online job postings in the Asia-Pacific Department’s October 2026 Regional Economic Outlook finds:
- Demand from employers fell with the onset of AI in jobs where AI can be used more extensively than in occupations with less exposure, by as much as 10 percent.
- That decline has stabilized, even while AI has become more capable over time.
- Employers increasingly want workers who can use AI to do more, from sharpening prompts to connecting AI with the data and expertise in workplaces.
Interpretation in the report:
- AI is reshaping work more than eliminating it.
- Employers still want people for knowledge-based work, even as AI has become much more capable at tasks previously thought to only be possible by humans.

Policymakers must address how to sustain the region’s economic resilience by:
- Managing persistent high and volatile oil prices and limits to adaptation.
- Targeting fiscal support more effectively to protect vulnerable households and firms while preserving public finance sustainability.
- Supporting job creation in an era when manufacturing is more capital intensive and AI reshapes labor demand.
- Reforming education and training to equip workers for an AI-driven labor market and the creation of knowledge-based service jobs.