Regional Economic Outlook
Asia and Pacific
November 2024
Short-term prospects for Asia and the Pacific have improved slightly compared to the IMF’s April forecasts, even though growth is still expected to moderate in 2024 and 2025. The regional growth projection for 2024 has been marked up to 4.6 percent from 4.5 percent in April, largely reflecting the over-performance in the first half of the year, and the region is forecast to contribute roughly 60 percent to global growth in 2024. In 2025, more accommodative monetary conditions are expected to support activity, resulting in a slight upward growth revision to 4.4 percent from 4.3 percent in April. Inflation has retreated in much of the region. At the same time, risks have increased, reflecting rising geopolitical tensions, uncertainty about the strength of global demand, and potential for financial volatility. Demographic change will act increasingly as a brake on activity, though structural shifts into high-productivity sectors such as tradable services hold promise to sustain robust growth.
The Asia-Pacific region has made rapid growth and development gains over the last three decades. A key contribution has come from structural transformation: workers leaving agriculture to work in more productive sectors. While historically, reallocation towards manufacturing has been a characteristic of Asia, services have played a larger role in the last three decades—both for generating employment and for boosting growth. Services will become more prominent still with rising incomes. However, ensuring a shift towards more productive services will require investment in education and training to supply needed skills, including to help workers adapt to the wave of new technologies, including Artificial Intelligence. Opening economies up to competition and trade in services is also critical. Population aging is bound to act as a drag on growth; boosting productivity and labor market participation will be needed to mitigate its impact.
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