IMF warns of slowing Asian growth, spillover from rising yields
The IMF said Asia’s growth will slow as higher yields, energy shocks and a possible AI correction threaten markets and public finances.
- On Thursday, the International Monetary Fund projected Asia's economic growth would moderate to 4.8% in 2026 and 4.4% in 2027, citing heightening risks from Iran war-induced energy shocks and potential AI market corrections.
- Emerging Asia will likely see growth moderate to 5.1% in 2026 from 5.6% last year due to the hit from higher energy prices stemming from the Middle East conflict.
- Advanced Asian economies expect growth to accelerate to 3.2% in 2026 from 2.5% last year, a revision the IMF largely attributes to the boost from the AI boom.
- Rising yields in major economies like the US and Japan could spill over to Asian bond markets, with the IMF warning that abrupt financial tightening could strain public finances by raising debt-servicing costs.
- Krishna Srinivasan, director of the IMF's Asia and Pacific Department, urged central banks to "respond promptly" if inflationary pressures persist and recommended that fiscal policy be targeted and temporary.
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Global Market: IMF warns of energy shock, AI correction risks to Asia's growth outlook
The IMF warned that Asia’s economic growth may slow to 4.4% in 2027 amid energy price shocks, Middle East conflict, AI market correction risks and rising bond yields. It urged central banks to prioritise price stability and governments to provide targeted fiscal support while managing inflation and debt pressures.
IMF warns of slowing Asian growth, spillover from rising yields
Bangkok: The International Monetary Fund (IMF) projected on Thursday that Asian economic growth would slow into next year, warning of increased spillover risks from the energy shock caused by the Iran war, the adjustment of the AI boom, and rising global bond yields. In a report on the outlook for the Asia-Pacific region, global lenders also said uncertainty over the direction of U.S. monetary policy could keep Asian financial markets volatile. …
The IMF has warned that risks to financial markets are growing as it raises growth forecasts for Asian economies. New interest rate hikes in the US, high energy prices and a possible correction in AI stocks threaten the region's outlook. The Fund predicts that growth will slow in 2027.
The IMF forecasts slower economic growth in Asia, at just 4.4% in 2027, amid rising energy prices, the risk of AI market corrections, and increasing global bond yields. El Niño threatens water resources and puts pressure on many Asian economies. Rising US bond yields are putting significant pressure on the European economy. The Asian economy is opening up a multi-trillion dollar consumer market.
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