## Press Briefing Transcript: Asia-Pacific Department, Annual Meetings 2025

_IMF News, October 16, 2025_

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## Bibliographic details
- Published: October 16, 2025

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### Regional growth and outlook
- Asia-Pacific projected to grow by 4.5 percent in 2025 and moderate to 4.1 percent in 2026.
- The region is expected to contribute about 60 percent of global growth both this year and in 2026.
- Downside scenario discussed: global growth next year could slow from 3.1 percent to 2.8 percent if downside risks materialize.

### Drivers of resilience
- Three key factors underpinning resilience:
  - Strong exports (including front-loaded shipments ahead of tariff hikes).
  - AI-driven tech boom lifting high‑tech exports, notably from Korea and Japan.
  - Accommodative macro policies in many countries, reinforced by favorable financial conditions (booming equity markets, lower long-term borrowing costs, weak dollar).
- Intra-regional trade surge also supported export strength.

### Country-level projections and key statistics
- China:
  - Growth: 4.8 percent in 2025, slowing to 4.2 percent in 2026.
  - Deflationary pressures persist; GDP deflator has been negative since 2023.
  - China contributes one-third to global growth.
  - Near-term fiscal support has been sizable; industrial policy fiscal support estimated at about 4 percent every year.
  - IMF estimate to rehabilitate the whole real estate sector: about 5 percent of GDP, possibly over three years.
  - Medium-term risk: without pivot to consumption, China could slow to 3.5 percent over the medium term.
- Japan:
  - Growth revised to 1.1 percent in 2025, projected to slow to 0.6 percent in 2026 (closer to potential).
  - Inflation projected to converge to the BOJ's 2 percent target in 2027, helped by a decline in commodity prices.
- India:
  - Growth: 6.6 percent in 2025, projected to moderate to 6.2 percent in 2026 (forecast predicated on tariffs remaining at 50 percent).
  - India’s 50 percent tariff cited as the highest globally; sectors affected include garments, leather, gems and jewelry (labor-intensive sectors).
  - First-quarter outturn at 7.8 percent cited as a strong tailwind.
- Korea:
  - Growth: 0.9 percent in 2025, increasing to 1.8 percent in 2026.
  - Government debt ratio to GDP around 50 percent; judged as low versus many advanced economies with short-term fiscal space but long-term demographic pressures.
- ASEAN:
  - Expansion projected at 4.3 percent for two straight years, supported by strong export strength and in some countries policy support.
- Sri Lanka:
  - Recent rebound after crisis: 5 percent growth last year; estimated 4.2 percent this year and next, moving toward potential of 3 percent.
  - IMF advice: continue program implementation, fiscal consolidation, ensure viability of state-owned enterprises and public investment management.
- Bangladesh:
  - IMF lowered FY26 growth projection to 4.9 percent (from 5.4 percent earlier); end‑FY26 inflation revised to 8.5 percent (World Economic Outlook figure referenced as 8.7 percent in a question).
  - Reasons cited for lower growth: tighter policy mix, tariffs and uncertainty, upcoming elections, and weakness in the financial sector.
  - Program review priorities: revenue mobilization and financial sector reforms.

### Risks and channels of transmission
- Key downside risks:
  - Escalation of tariffs and trade uncertainty (tariffs could still increase).
  - Geopolitical tensions raising risk premia and interest rates.
  - Tightening of financial conditions amplifying debt-related vulnerabilities.
- Asia particularly exposed due to high integration in global supply chains; shocks between large economies (U.S. and China) have amplified regional impact.
- Rare earth export controls and renewed U.S.-China tensions flagged as potential supply‑chain and risk amplifiers.

### Policy recommendations (regional and country-level)
- Monetary and fiscal stance:
  - Where inflation is expected to fall below target, countries can lower interest rates.
  - Deploy temporary, well-targeted fiscal measures to support vulnerable people and viable firms in sectors hit by higher tariffs.
  - Upgrade medium-term fiscal frameworks to prepare for future shocks and manage long-term spending pressures.
- Growth, inclusiveness, and rebalancing:
  - Rebalance toward domestic demand, especially consumption, through stronger social safety nets and, where needed, balance sheet repair.
  - Pursue structural reforms to boost productivity and inclusion (labor market flexibility, business environment improvements).
- Trade and financial integration:
  - Deeper regional integration to yield sizable gains: cut non-tariff barriers, broaden and modernize trade agreements (services and digital trade), ease FDI restrictions.
  - Boost capital efficiency: deepen bond and equity markets, broaden market-based finance, strengthen insolvency and debt-workout frameworks so capital flows to most productive firms.
  - Streamline regulations to unleash private-sector potential.
- China-specific:
  - Fix the real estate sector via comprehensive policies (resolve unfinished/pre-sold housing; allow non-viable developers to exit; ensure funding for completion).
  - Shift fiscal composition away from mainly industrial policy toward measures that boost consumption and social safety nets.
- Korea-specific:
  - Use short-term fiscal space prudently and implement pension and healthcare reforms and medium-term fiscal frameworks to manage aging-related pressures.
- Sri Lanka-specific:
  - Stay the course on program reforms; maintain cost-recovery energy pricing as a continuous structural benchmark under the program.

### Structural challenges and reform priorities
- Structural headwinds for Asia this decade versus last:
  - Aging populations, weaker productivity, pandemic scars, rising youth unemployment, and dissatisfaction over jobs and opportunities.
- Reform priorities to lift medium-term potential:
  - Boost services sector (noted for China).
  - Improve public investment management and governance (Sri Lanka emphasis).
  - Liberalize trade, improve business environment, and make labor laws more flexible where needed (India emphasis).
  - Promote deeper intraregional trade and financial integration (including digital payments and QR-code cross-border initiatives).

### Events and publications
- Press briefing date: October 16, 2025.
- Asia and Pacific Regional Economic Outlook to be launched in Hong Kong on October 24 (press conference at 10 a.m. Hong Kong time).

*Transcript of IMF press briefing, Asia and Pacific Department, Annual Meetings 2025.*

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## References

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_Source: https://www.imf.org/en/news/articles/2025/10/16/tr-101625-press-briefing-transcript-asia-pacific-department-annual-meetings-2025_