The latest International Monetary Fund (IMF) projections for gross domestic product (GDP) growth among the economies in Asia suggest that the rebalancing of global trade has been side-stepped in many cases—at least so far.
Trade has increased and globalization continues apace even as Washington’s attempt to rebalance global trade looks to be approaching something of a peak.
Take a look at the effective tariff rates on key U.S. regional trade partners in the region:
- China: 40.36%
- Japan: 14.75%
- South Korea: 13.05%
- Indonesia: 12.51%
- India: 8.56%
- The Philippines: 7.62%
- Malaysia: 6.55%
These stand in contrast to the average effective tariff of all U.S. trade partners, which is currently 9.75%.
Just as inflation in the U.S. has yet to explode, economies in Asia continue to grow despite U.S. disruptions to the global supply chain.
A front-loading of exports, technology investment and policy support aided growth across Asia, according to analysis by the IMF. To that end, we would surmise a new-found search for markets other than the U.S. as well as alternate supply-chain routes from China.
The IMF predicts growth in the Asia-Pacific region will likely slow to 4.1% in 2026—down from 4.5% this year. It also expects inflation will likely remain moderate.
India and Vietnam are expected to keep leading the way, with India’s real GDP growth projected at 6.2% in 2026 and Vietnam’s rate expected at 5.6%. Growth in China is expected to decelerate to a 4.2% rate as it deals with an internal debt overhang and misallocated government-sponsored investments.
Growth in Japan is expected to decelerate from 1.1% to 0.6%, while South Korea’s growth will accelerate from 0.9% this year to 1.8% in 2026. Economies in the Association of Southeast Asian Nations (ASEAN) are projected to expand by 4.3% for a second year in a row.
We agree with the IMF that Asia’s economies must continue the process of rebalancing more toward domestic demand and regional integration. The lesson from dealing with U.S.—initially as the benevolent engine of global growth and now as a client—is that investment in the domestic population and its income is necessary to sustain strong and durable growth.
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