IMF Forecasts Growth in Asia To Slow in 2025

Growth is expected to slow by 0.2 percentage points in Asia in 2025, according to the International Monetary Fund’s (IMF) October World Economic Outlook. Despite this slight deceleration, the IMF says Asia will remain the "world's engine of growth" with a forecast growth of 4.4 percent. The global average is +3.2 percent.

As the following chart shows, real GDP growth is expected to accelerate in the Philippines, Indonesia, Thailand and Japan in 2025. Japan saw its economic growth forecast slow from 1.7 percent in 2023 to 0.3 percent in 2024, largely due to supply disruptions in the auto industry and the "fading of one-off factors", such as the country now seeing the tail end of a surge in post-pandemic tourism, which had driven growth in 2023. The IMF has said Japan will likely see growth reach 1.1 percent in 2025, which is an increase of 0.1 percentage point from the previous forecast. This is due to real wage growth expected to strengthen, leading to an anticipated boost of private consumption.

In India, China and Malaysia, growth is expected to slow, albeit while still remaining resilient. In China, this slowing is partly due to the property sector having continued to deteriorate, weighing on investment, as private consumption also weakened amid low consumer confidence. The IMF states that several developments have taken place since the finalizing of the China forecast, including Q3 data having come out slightly weaker than expected, while the Chinese authorities’ newly announced fiscal and housing measures could “provide some upside potential” to the IMF’s growth projection, particularly in 2025, when the measures are likely to come into effect.

According to Krishna Srinivasan, IMF Director of the Asia and Pacific Department, risks to Asia’s outlook include China’s current domestic demand weakness as well as “tentative signs” that global demand could weaken, including from the United States, which the IMF warns would be “bad news for an export dependent region like Asia”.