Economic Buzz: Asia-Pacific economy expected to grow 4.5% in 2025, China continues to see deflation

International Monetary Fund or IMF has stated that economic activity in the Asia-Pacific is holding up better than expected in April, despite the region bearing the brunt of U.S. tariffs and policy uncertainty remaining high. IMF projects the region to grow by 4.5 percent in 2025 and moderate to 4.1 percent in 2026. Inflation is expected to remain muted in most countries. The region is once again set to contribute the lion's share of global growth - about 60 percent both this year and in 2026. This is primarily driven by strong exports, a tech boom, and accommodative macro policies, reinforced by favorable financial conditions. The Chinese economy has remained resilient despite the increased tariffs, with robust growth in the first half of 2025 driven by fiscal expansion and strong exports. But growth is likely to moderate going forward from 4.8 percent this year to 4.2 percent next year, and uncertainty remains high. Deflationary pressures persist in China.

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