Executive Summary 3

Introduction 7

Section 1 – Asia’s Macroeconomic Outlook for 2026 10

1.1 Macroeconomic fundamentals 14

1.2 Risks to Asia’s macroeconomy 15

1.3 Trade outlook 17

Section 2 – Geopolitics and Risks to the Outlook 24

2.1 Trade uncertainty: The key risk to Asia’s outlook 25

2.2 Global conflicts ease but the landscape remains fragile 226

2.3 Regional security flashpoints 27

2.4 Asian domestic political adjustments 29

Section 3 – Asia’s 2026 Outlook by Country 31

China: Silver linings to persist in 2026 33

India: A regional outperformer 35

Indonesia: Steady growth in 2026 36

Japan: Subdued economic growth ahead 38

South Korea: Growth with resilience 39

Malaysia: Domestic demand to fuel growth 41

Vietnam: A story of transformation 43

Thailand: Stable growth with risks on the horizon 44

The Philippines: Strong growth despite escalating risks 46

Section 4 – Asia is Emerging as a Digital, AI and Semiconductor Hub 48

4.1 Asia’s rapid digitalisation 49

Interview with Gobind Singh Deo, Minister of Digital, Malaysia 51

4.2 Asia’s e-commerce sector is booming but faces challenges 54

4.3 AI progress amid global tech race 56

4.4 Semiconductor production remains vulnerable to geopolitical tensions 58

4.5 Electric vehicles: Competitive measures and shifting trade patterns 60

Section 5 – Asia’s Sustainable Energy Transition 62

5.1 Ensuring Asia’s energy security 63

5.2 Renewables drive energy investment in Asia 64

5.3 Asia’s carbon markets expand 66

5.4 Green finance 70

Conclusion 74

References 76

Authors 96