The International Monetary Fund (IMF) has raised concerns about Asia’s economic outlook, citing rising trade tensions, a struggling Chinese property sector, and the potential for further market instability. According to the IMF’s latest regional economic outlook, a prolonged slowdown in China could negatively impact both Asia and the global economy, especially for countries with similar export structures. The IMF recommended that China adopt a more demand-driven approach, addressing issues in its property sector and bolstering domestic consumption.
The IMF forecasted Asia’s economy to grow by 4.6% in 2024 and 4.4% in 2025, slightly up from April’s estimates but lower than the 5.0% growth seen in 2023. Risks to the region remain skewed to the downside, with geopolitical tensions, past monetary tightening, and trade restrictions posing potential threats. Escalating retaliatory tariffs among major trading nations could further harm growth by driving up trade costs and intensifying market fragmentation.
The IMF also warned that recent financial market volatility might continue as markets adjust to anticipated interest rate changes from the U.S. Fed and Japan's central bank. Sharp adjustments in exchange rates could impact consumer confidence and investment across Asia, the report noted.
For China specifically, the IMF expects 4.8% growth in 2024, up slightly from April’s forecast but lower than the 5.2% increase in 2023, with growth expected to decelerate further to 4.5% in 2025.