Outlook 25: volatility & opportunity in Asia

The new year will be a period of uncertainty and volatility in the Asian region, but also one of opportunity.

Global trade, critical for Asia's economic prosperity, will be impacted by the tariff policies of the incoming administration in the United States. This is a major source of downside risk to the region's growth prospects for 2025.

In a bid to offset the impact of these moves, ANZ Research expects China to implement fiscal and monetary stimulus measures to support domestic demand. Despite that, overall Chinese gross domestic product (GDP) growth is expected to slow to 4.3 per cent in 2025.

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Broader Asia has benefited from the ‘China-plus-one’ diversification strategy in previous years, and those incoming US tariffs could once again see trade and investment flows redirected throughout the region.

ANZ Research expects the GDP growth in the ASEAN region to be around 4.5 per cent in 2025. But that is contingent on the US not imposing tariffs or other trade restrictions on nations in the group.

India is going through a cyclical slowdown, but there is scope for increased public spending - and for the Reserve Bank of India to cut interest rates - to maintain growth at around 6.5 per cent in 2025.

Increased trade protectionism is not welcome in Asia. Being adaptable and responsive to the changing business climate will be key to navigating - and thriving in - what will be a year of many twists and turns.

Khoon Goh is Head of Asia Research at ANZ