IMF Forecasts Asia-Pacific Growth to Slow to 4.4% in 2027 Amid Energy Shock and AI Uncertainty

Key summary

The International Monetary Fund projects that Asia-Pacific economic growth will decelerate to 4.4% in 2027, down from 4.8% in 2026 and 5% in 2025. The outlook cites risks including an energy shock, rising global bond yields, and uncertainty surrounding artificial intelligence demand. While forecasts for 2026 and 2027 were revised upward from April estimates due to AI-driven activity in advanced economies, the IMF warns that downside risks persist. These include a potential stalemate in the Middle East conflict affecting commodity prices and sovereign debt stress in major economies like the United States, Britain, the eurozone, and Japan, which could raise Asian borrowing costs. Emerging Asia's growth is expected to moderate to 5.1% in 2026 from 5.6% last year due to higher energy prices, while advanced Asian economies are projected to accelerate to 3.2% this year from 2.5% in 2025 on AI investment. The IMF advises central banks to prioritize price stability and governments to maintain targeted, temporary fiscal support rather than broad fuel subsidies.