Asia to Remain Primary Driver of Global Economic Growth: IMF Projections

Asia Remains Main Driver of Global Growth, Despite Energy Shock

The International Monetary Fund (IMF) has stated that Asia will continue to be the primary driver of global growth, with India and China contributing 70 per cent of the regional expansion. However, the energy shock caused by the Gulf crisis is expected to negatively impact the region.

According to the IMF, the Asia-Pacific segment experienced a five per cent growth rate in 2025, despite the impact of US tariffs and trade uncertainty. However, this growth rate is projected to moderate to 4.4 per cent in 2026 and 4.2 per cent in 2027. The IMF attributed this growth to exports and consumption, which held up better than anticipated, supported by accommodative policies and financial conditions.

| Growth Rate | 2025 | 2026 | 2027 | | --- | --- | --- | --- | | Asia-Pacific | 5% | 4.4% | 4.2% |

The IMF report highlighted that Asia consumes approximately 38 per cent of the world's oil and 24 per cent of its natural gas. The region is also one of the largest crude refiners, accounting for about 35 per cent of global refining capacity, which is heavily concentrated in China, India, Korea, and Singapore.

Krishna Srinivasan, Director for the IMF Asia Pacific Department, stated that growth across most Asian economies turned out stronger than expected in late 2025. However, he warned that the energy shock will raise inflation, weaken external balances, tighten financial conditions, and narrow policy space.

The conflict in the Middle East, which began after the US and Israel launched attacks on Iran on February 28, has paralysed global energy markets and disrupted trade. Srinivasan noted that so far, inflation expectations remain broadly anchored in 2027, giving central banks some room to look through the first-round rise in headline inflation. However, he advised that monetary policy should remain agile, as a prolonged energy shock could weaken currencies and generate more persistent inflation through exchange-rate pass-through and broader second-round effects.

The Asian region's oil and gas use amounts to about four per cent of gross domestic product, nearly double Europe's share. In economies such as Malaysia and Thailand, oil and gas use exceeds 10 per cent of gross domestic product, where transport and industry play larger roles.