Asia continues to drive global growth, as per the latest World Economic Outlook by the International Monetary Fund (IMF). According to the global lender, momentum in Asia remains strong, and regional growth is forecasted at 4.5% in 2024, an increase of 0.3 percentage points from the October prediction. With this, Asia’s economy would account for approximately 60% of global growth this year. For 2025, the IMF expects growth to decelerate slightly to 4.3%, as per the Asia economy outlook.

India and China are anticipated to be the primary contributors to this growth. India is projected to lead with a growth rate of 6.8%, the highest among major economies, while China’s economy is expected to expand by 4.6%.

The ASEAN-5 countries – Indonesia, Malaysia, the Philippines, Singapore, and Thailand – are predicted to see a growth rate of 4.5% this year and 4.6% next year.

What will drive growth in Asia?

Several factors are driving growth in Asian countries. “In China and India, we expect investment to contribute disproportionately to growth, much of it public, especially in India,” said Krishna Srinivasan, Director of the Asia and Pacific Department at the IMF. “In emerging Asia, outside China and India, robust private consumption will remain the main growth engine.”

For some advanced economies, such as Korea, the IMF expects exports to drive the economy, in part due to the strong global demand for high-end semiconductors.

The outlook for China’s economy remains crucial for Asia, Srinivasan highlighted. “Recent data have been mixed. (…) A more protracted slowdown in China would be bad news for the region for several reasons,” he said. On the flip side, Asia would do better when China grows faster. “Some countries, notably [South] Korea, which have closer trade links with China, will benefit more,” Srinivasan added.

The IMF cautioned that without a thorough restructuring strategy for China’s distressed property sector, there is a risk of a prolonged dip in domestic demand, which could further deteriorate the country’s economic situation.

After an expected growth of 4.6% this year, the IMF expects China’s growth to slow to 4.1% in 2025.

Global economy “surprisingly resilient”

As for the global economy, the IMF noted that recovery is “steady but slow and differs by region”. The baseline forecast assumes that the global economy will continue to grow at the same rate as in 2023, namely 3.2% in 2024 and 2025.

The projection for global economic growth in five years stands at 3.1%, marking the lowest rate in decades. Meanwhile, global inflation is expected to decrease gradually, falling from 6.8% in 2023 to 5.9% in 2024, and further to 4.5% by 2025.

“The global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability,” the IMF said.