IMF Projects Slower Asian Growth Amid Rising Global Yields

3-line summary

• The IMF projected Asia's economic growth will slow to 4.8% in 2026 and 4.4% in 2027, down from 5.0% in 2025 — though both figures are upgrades from its April forecast, per Investing.com. Advanced Asian economies are expected to accelerate to 3.2% in 2026 from 2.5% in 2025, driven largely by the AI boom, while emerging Asia is seen slowing to 5.1% from 5.6% as energy prices rise. The IMF flagged some portfolio outflows from South Korean tech stocks, and said several emerging markets face currency depreciation pressure.
• The report said uncertainty over US monetary policy direction could keep Asian financial markets volatile, with expected further US tightening later this year, combined with advanced-economy fiscal strain, likely to push up Asia-Pacific interest rates; currency and capital-flow volatility have also risen since the energy shock. Key downside risks cited: a prolonged Middle East conflict keeping commodity prices elevated and depleting oil reserves, and a correction in AI demand weakening global growth, with Asia especially exposed given its heavy presence in AI supply chains.

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