IMF warns of slowing Asian growth, spillover from rising yields

Business Recorder reported that the International Monetary Fund now expects Asia's economic growth to reach 4.8% in 2026 and 4.4% in 2027, figures that sit above its April projections yet below the 5.0% expansion recorded in 2025. The outlook, released in Bangkok during the IMF's annual meetings, points to a moderation in growth next year. The report also says advanced Asian economies are expected to accelerate to 3.2% in 2026, helped by the AI boom, while emerging Asia slows to 5.1% from 5.6%.

The Fund flagged rising risks from the energy shock tied to the Iran war, a possible correction in AI demand, and spillovers from higher global bond yields. It warned that a prolonged Middle East stalemate could keep commodity prices elevated and draw down oil reserves. Currency and capital flow swings have intensified this year, with several emerging economies facing depreciation pressure.

The IMF urged Asian central banks to stay focused on price stability and to respond quickly if inflation becomes more persistent. It also advised governments to keep fiscal support targeted and temporary, steering clear of blanket fuel subsidies and price controls that could prove costlier.