Macroeconomic overview

APAC entered 2026 in a relatively strong position, but that momentum is now under pressure from the energy shock triggered by the conflict in the Middle East.

IMF estimates indicate that regional growth reached around 5% in 2025 and will moderate to 4.4% in 2026 and 4.2% in 2027, assuming disruption to energy markets remains temporary.

External demand has provided an important buffer. Strong global demand for technology goods, including semiconductors and AI‑related equipment, has supported export growth across Malaysia, Singapore, Taiwan, South Korea, and China. At the same time, greater trade diversification beyond the US has helped offset softer US demand for non‑technology exports.

The outlook has weakened as higher oil and gas prices feed through to inflation, trade balances, and fiscal pressures. Asia is highly import-dependent for energy, especially for oil and gas. Net oil and gas imports account for around 2.5% of regional GDP, while oil and gas consumption represents about 4% of GDP, nearly double Europe’s share. In several economies, imported oil and gas make up more than 60% of primary energy consumption, leaving inflation and external accounts highly exposed to prolonged energy price shocks.

Reflecting these pressures, the IMF expects regional inflation to rise to around 2.6% in 2026, up from 1.4% in 2025. Should the conflict persist and energy prices remain elevated, cumulative growth losses across APAC could reach 1% to 2% by 2027.1

Economic growth in the GCC is expected to moderate in 2026 as geopolitical tensions and disruption to key energy trade routes weigh on the region.

The Strait of Hormuz remains a central risk, with higher shipping and insurance costs affecting trade flows and weakening short-term growth expectations.

Despite this, the region’s fundamentals remain strong. Diversified policy frameworks, ongoing infrastructure investment, and substantial fiscal buffers continue to support stability. The impact is uneven, with economies exposed to trade and tourism facing greater near-term pressure.

A gradual recovery is expected as conditions stabilise. Sovereign wealth assets and diversification strategies will remain key supports for medium-term growth.2

GDP growth and inflation

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Australia China India Japan Malaysia Singapore Taiwan Thailand KSA UAE

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KSA

Real GDP

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Inflation rate

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Sources

“Asia’s Economic Resilience Is Being Tested by the Energy Shock,” IMF, 16th April 2026
“GCC economies stay resilient as IMF trims regional outlook,'' Khaleej Times, April 2026

Disclaimer

This macroeconomic chapter is based primarily on the estimates and projections published in the April 2026 World Economic Outlook. These projections reflect statistical information available to the International Monetary Fund up to 1st April 2026 and may not capture the latest published data in all cases. The IMF assumes that the conflict in the Middle East will remain limited in duration, intensity, and geographic scope, with related disruptions easing by mid-2026. If the conflict persists, escalates or causes more severe disruption to energy markets, trade routes or financial conditions, the growth and inflation outlook could differ materially from the projections presented in this chapter. The forecasts should be read in the context of the assumptions used in the reference scenario. The analysis also draws on the latest available reports from national central banks and other official institutions, accessed up to the end of April 2026.

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