IMF warns of slowing Asian growth and spillover from rising yields
SPY•The IMF expects Asia's economy to grow 4.8% in 2026 and 4.4% in 2027, slowing from 5.0% in 2025. It warned that energy shocks, a potential AI correction and rising global yields could weigh on the region.
1. Growth outlook
The IMF projected Asia's economic growth would moderate next year, despite raising its forecasts from April. It expects emerging Asia to grow 5.1% in 2026, down from 5.6% last year, partly because of higher energy prices.
2. Financial risks
The IMF warned that uncertainty over US monetary policy could keep Asian financial markets volatile, while monetary tightening and fiscal pressures in major advanced economies could push up yields across Asia and the Pacific. It said a correction in AI demand could weigh on global growth, particularly in Asia because of the region's exposure to the AI production chain.
3. Policy advice
The IMF said risks to its outlook were tilted to the downside, citing the possibility that a prolonged Middle East conflict could keep commodity prices high. It urged central banks to focus on price stability and said fiscal policy should be targeted and temporary.
