Full impact of US tariffs on Asia-Pacific remains unclear: IMF

Logo of The International Monetary Fund (IMF) 

The International Monetary Fund (IMF) said Asia-Pacific economies outperformed expectations in the first half of 2025 but warned that the full effects of higher US tariffs remain uncertain and that growth is set to slow.

In a report released Friday, the IMF cautioned that escalating trade tensions continue to pose a major downside risk to the region, adding that the external threat comes at a difficult time when domestic demand—particularly consumer spending—remains below pre-pandemic levels in many countries.

The IMF noted that weak service sectors, a sluggish real estate market, and low consumer confidence have all constrained job recovery and income growth since the pandemic. It also highlighted that institutional constraints, such as limited fiscal space due to high debt levels, have further weighed on consumption.

The fund expects Asia’s GDP growth to slow in the second half of the year, bringing full-year growth to 4.5%, compared to 4.6% in 2024.

As the negative effects of US tariffs deepen, the fund projects regional growth to moderate further to 4.1% in 2026, noting that while the AI-driven investment boom has supported growth, it could also become a double-edged sword for the region’s economies.