Asian Markets in 2025: Why Winners Pulled Away From Losers
What defined Asian markets in 2025?
2025 exposed a deep fault line across Asian markets. While headline growth held steady, the region split sharply between tech-led exporters that surged ahead and consumption-driven economies that lost momentum. The divergence wasn’t cyclical. It was structural.
What triggered this sharp divergence across Asian markets?
According to IMF data, Asia’s GDP grew around 4.5 percent in 2025, but this masked stark differences beneath the surface. Economies embedded in global technology supply chains benefitted from an AI-led export boom, while those reliant on domestic consumption struggled to generate demand.
Which Asian markets emerged as clear winners?
Taiwan and Singapore outperformed expectations, growing 3.7 percent and 2.2 percent respectively. AI-linked exports—especially semiconductors and telecom equipment—jumped more than 20 percent year-on-year. Asia accounted for nearly two-thirds of global growth in AI-related goods.
Why did consumption-led Asian economies lag?
ASEAN economies slowed despite easing inflation. Growth in the Philippines fell to 5.4 percent, while Indonesia decelerated to 4.9 percent. Weak household demand, sluggish services activity, and cautious consumer spending prevented these markets from capitalising on favourable price conditions.
How did US tariffs reshape Asia’s trade flows?
US tariffs sharply reduced China’s exports to America—down 17.7 percent year-on-year. But China adapted quickly. Exports to ASEAN rose 14.5 percent, to the EU 7.7 percent, and to India 13.3 percent, accelerating Asia-centric trade realignment.
What role did China’s slowdown play?
China’s growth cooled from 5 percent to 4.8 percent in 2025 and is projected to slow further. Falling export prices and weak domestic demand raised concerns of negative spillovers, particularly for ASEAN economies integrated into China’s supply chains.
Why did domestic demand become the key differentiator?
Retail sales across much of Asia remained below pre-pandemic averages. Services—especially transport, trade, and accommodation—failed to recover fully. Economies without strong export engines struggled to compensate for this persistent demand weakness.
How did policy responses differ across the region?
China, South Korea, Indonesia, and Vietnam rolled out fiscal stimulus, while most Asian central banks eased monetary policy amid falling inflation. Japan stood apart, cautiously normalising rates as inflation approached target levels.
What explains the inflation split across Asia?
Emerging Asia saw inflation fall to 1.6 percent, with China experiencing near-zero inflation—signalling weak demand. India remained an outlier, with inflation above target, forcing policymakers to stay cautious.
How did financial conditions evolve during the year?
After volatility early in 2025, financial conditions eased. A weaker US dollar revived portfolio inflows into Asian emerging markets, stabilising currencies and bond markets after earlier turbulence.
What structural challenges still haunt Asian markets?
Productivity growth stalled due to capital misallocation, while aging populations in China, Japan, and South Korea shrank labour supply. These pressures threaten long-term growth potential across the region.
How is supply-chain realignment reshaping Asia?
Companies continued to diversify manufacturing away from China. FDI into ASEAN stayed resilient, reinforcing Southeast Asia’s role as an alternative production hub—though benefits remain uneven across countries.
What does Asia’s outlook look like in 2026?
The IMF expects regional growth to slow to about 4.1 percent. To narrow the divergence, Asian economies must strengthen domestic demand, improve financial intermediation, and deepen regional trade integration.
(yMedia is the content partner for this story)