The International Monetary Fund lowered its growth forecasts for China in 2026 and 2027 and raised its 2026 projection for Japan.
In its October World Economic Outlook published Tuesday, the IMF said economies differ in their exposure to the Middle East conflict and energy shocks and in their ability to benefit from the artificial intelligence boom.
"The consequence of these differences is a bifurcated outlook, rather than a uniform or synchronized one," the IMF said.
The IMF projects China's economy will grow 4.5% in 2026 and 4.0% in 2027. Both are 0.1 percentage points below its July update.
The fund said China's second-quarter growth of 4.3% from a year earlier was weaker than it expected. It cited sluggish consumption and weakening investment amid property sector strains, partly offset by export growth.
The IMF raised Japan's 2026 growth forecast to 0.7% from 0.6% in July and kept its 2027 outlook at 0.7%. The fund said second-quarter GDP came in better than its staff had expected, and that fiscal support measures are partly cushioning higher energy prices.
Across other Asian economies, India's growth is projected at 7% for 2026, up 0.6 percentage points from the July estimate on the back of stronger-than-expected momentum driven by "resilient domestic demand and robust services activity."
South Korea's growth is estimated at 3.3% in 2026 and 2.8% in 2027, up from 2.6% and 2.5% in July, citing strong external semiconductor demand.
For ASEAN-5, which comprises Indonesia, Malaysia, the Philippines, Singapore and Thailand, growth is estimated at 4.4% in 2026, up 0.3 percentage points from the July forecast, and 4.3% in 2027, unchanged from the prior outlook.
Overall, the IMF said risks are skewed to the downside, warning that a further escalation in the Middle East could keep energy and food costs elevated.
