REGIONAL REPORT
According to JP Morgan’ s analysis, China’ s household consumption weakened in 2025. The deceleration was broad-based across several sectors and is primarily driven by a weak labour market and slowing household income growth, it said. The ongoing housing downturn also contributed to increased household balance-sheet caution. It expects real GDP growth of 4.3 %( range: 4.1 – 4.6 %) in 2026.
“ Despite weak domestic demand, industrial expansion has persisted with overcapacity now extending beyond traditional heavy industries( such as steel, cement, chemicals) to encompass emerging higher-end sectors and is even spilling over into services. A notable example is the clean tech sector( including electric vehicles, lithium-ion batteries and solar panels) which has experienced rapid capacity growth in recent years, driven by generous policy subsidies. This has led to intensified price competition,” said JP Morgan.
India
In January 2026, the IMF revised India’ s growth upward by 0.7 percentage point to 7.3 per cent for 2025. The country has launched reforms to insulate itself from global tariff impacts. To diversify its export markets, it has signed free trade agreements with the U. K and is pursuing agreements with the EU and Australia.
Indonesia
The IMF revised Indonesia’ s growth in 2025 as 5.0 per cent and cited 5.1 per cent growth for 2026. Indonesia is one of the key suppliers of nickel used in batteries, semiconductors and data centre infrastructure. Indonesia’ s digital economy, measured in gross merchandise value terms, remained the largest in ASEAN in 2025.
Japan
The IMF has projected Japan’ s economic growth to slow from 1.1 per cent in 2025 to 0.7 per cent in 2026. Japan’ s economy contracted by 2.3 per cent in 2025. Inflation is expected to moderate in 2026 and converge towards the country’ s target in 2027, as food and commodity prices ease.
Malaysia and Pakistan
In Malaysia, the IMF expects growth in 2025 to be 4.6 % and to slow in 2026 to 4.3 %. The country benefits from the AI-linked structural shift.
“ Its total electrical and electronics( E & E) sector accounts for roughly 40 % of total exports, supported by sustained global demand for semiconductors, which comprise approximately 65 % of E & E exports, underscoring the country’ s deep integration within global technology supply chains,” commented JP Morgan in January 2025 analysis.
In Pakistan, the IMF expects growth in 2025 to be 3.0 %, rising to 3.2 % in 2026.
Philippines
In December 2025, the IMF posted its projection of 5.1 % growth in 2025 for the Philippines, rising to an expected 5.6 % in 2026.
South Korea
“ Korea’ s growth will accelerate from 1.0 per cent in 2025 to 1.9 per cent in 2026,” commented the IMF in December 2025.
Sri Lanka and Thailand
After, a deep recession during the crisis, Sri Lanka has now implemented a homegrown reform programme and now benefits from strong growth( an estimated 4.2 per cent in 2025 with potential of three per cent in 2026).
The IMF maintained its GDP growth forecast at 1.6 % for 2026 for Thailand, with growth expected to improve to 2.2 % in 2027. Growth was projected to be 2.1 % in 2025.
Taiwan
Thailand.
Taiwan experienced an AI / semiconductor export surge in 2025 although the IMF has trimmed its expectation for Taiwan’ s 2026 prospects versus 2025. Continued global demand for AI chips and server-grade semiconductors could keep exports strong in early-to-mid 2026.
Image: Tan Kaninthanond, Unsplash.
Japan.
Image: Shutterstock. com.
Vietnam
“ Vietnam has increasingly functioned as a“ connector economy”, facilitating trade flows between the U. S. and China. As corporates diversify production away from China, Vietnam has absorbed some of the manufacturing activity tied to U. S. end-demand while continuing to source intermediate inputs from China,” commented JP Morgan.
“ Vietnam’ s strong electronics exports reflect underlying structural strengths, including competitive manufacturing costs, improving industrial capacity and steady global demand for hardware. Foreign direct investment flows have also picked up. Together, these trends point to a broader strengthening of Vietnam’ s manufacturing base and reinforce its position as a key hub,” it added.
Over the medium term, the World Bank projects that growth will ease to 6.1 per cent in 2026 before rebounding to 6.5 per cent in 2027, supported by a recovery in global trade and Vietnam’ s continued appeal as a competitive manufacturing base. n
ISMR February 2026 | ismr. net | 29