IMF upgrades Asia’s growth forecast, warns of risks

Economic activity in the Asia-Pacific was holding up better than expected in April, despite the region bearing the brunt of U.S. tariffs, said Krishna Srinivasan, director of the IMF’s Asia Pacific Department.

The International Monetary Fund revised up Asia’s economic growth forecast on Thursday, but warned of risks to the outlook from trade policy uncertainty and geopolitical tensions.

Economic activity in the Asia-Pacific was holding up better than expected in April, despite the region bearing the brunt of U.S. tariffs, said Krishna Srinivasan, director of the IMF’s Asia Pacific Department.

“The region is once again set to contribute the lion’s share of global growth – about 60%, both this year and in 2026,” Srinivasan told a news conference.

The IMF expects Asia’s economy to expand 4.5% in 2025, slowing from 4.6% last year but up 0.6 percentage point from its estimate made in April, he said. It projects growth to slow to 4.1% in 2026.

Exports were supported by firms front-loading shipments ahead of the tariff hikes and a surge in intra-regional trade, he said. A technology boom driven by artificial intelligence also lifted exports, especially from South Korea and Japan.

Booming equity markets, lower long-term borrowing costs and a weak dollar have also helped, Srinivasan said.

But risks to the outlook were skewed to the downside as the “dust on tariffs has not settled yet” and could still increase, he said.

Interest rates could rise again especially if trade policy uncertainty or geopolitical tensions intensify, while tightening financial conditions could increase the debt burden for some countries and stifle growth, Srinivasan said.

Concerted efforts to pursue reforms to boost trade and investment will help fuel durable growth for years to come, he added.

© ZAWYA