Asia powers a slowing world

Insight: Reacting to tariffs, rising inflation and global policy uncertainty, the International Monetary Fund sharply reduced its growth forecasts this week. World GDP is now expected to increase by 2.8% in 2025, down from the 3.3% it expected as recently as January. The outlook for the US has taken the hardest hit, with forecast growth down from 2.7% to 1.8%, while the China figures were cut from 4.6% to 4% and Europe’s (admittedly much lower) GDP expansion was shaved by 0.2 percentage points to 0.8%.  

Impact: The gloom and recession warnings being issued by the IMF, as well as private economists, risk hiding a more positive story: the resilience of Asia’s economies. China, hit by the highest tariffs in history, is still expected to grow at 4% this year, while India is set to keep expanding at more than 6% annually. The Philippines and Vietnam are growing at well over 5% and Indonesia and Malaysia at more than 4%. Granted, growth in the developed markets of Japan, South Korea and Singapore is much slower, but taken as a whole, Asia’s strong domestic demand, growing inter-regional trade and increasingly well-managed economies means it will remain the world’s fastest-growing region – and increasingly carry the rest of the world. 

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The US has announced this staggering – and uncannily precise – tariff on solar cells and panels imported from Southeast Asian nations, including Cambodia, Thailand, Vietnam, and Malaysia. This move is yet another blow to Chinese goods by the Trump administration, as these products are predominantly manufactured in Chinese-owned factories, which are accused of benefiting from government subsidies that enable unfairly low pricing. The tariff is set to take effect from June 2.

Insight: Amid growing US-China tensions, nearshoring trends, and continued fragmentation of global supply chains, Gulf nations – led by the UAE – are accelerating economic partnerships with Southeast Asia with a focus on renewable energy. Most recently, Abu Dhabi Future Energy Company PJSC – Masdar partnered with Indonesia's PT PLN (Persero) to advance floating solar power development in the region. Earlier this year, Masdar also entered the Philippine market for the first time to support the development of solar, wind, and battery energy storage systems.

Impact: As Southeast Asia confronts soaring energy demand while pursuing net-zero targets, Gulf investment is playing a catalytic role in accelerating the region’s energy transition. The UAE’s push into renewables not only diversifies its own economic footprint but also positions it as a key enabler of Southeast Asia’s green infrastructure buildout. These partnerships bring critical capital, technology transfer, and project development expertise at a time when Western financing for emerging markets is increasingly in doubt. The result is a deepening economic corridor that aligns Southeast Asia’s growth ambitions with the Gulf’s strategy to lead in the global energy transition – turning geopolitical uncertainty into opportunity for shared, sustainable growth. 

Insight: Labubu, a mischievous, rabbit-eared character created by Hong Kong artist Kasing Lung, has become the face of a global collecting frenzy, largely propelled by Pop Mart—the Chinese company that revolutionized the “blind box” collectible toy market. The success of Labubu has fueled Pop Mart’s global expansion, with its sales revenue hitting nearly $2 billion in 2024, more than double the previous year. 

Impact: Uniquely designed without predefined narratives, Labubu has exploded into a full-blown global cultural phenomenon. Its quirky, “ugly cute” appeal resonates deeply with predominantly female consumers in urban settings across a wide age range, offering a form of escapism and emotional comfort associated with nostalgia and childhood. The hype around Labubu is further intensified by a sense of urgency and exclusivity since the blind boxes are only sold in limited quantities online. As celebrities like Rihanna and Blackpink’s Lisa flaunt their Labubu collections, the frenzy continues to grow. The success of Labubu and Pop Mart perfectly exemplifies how brands can cultivate loyalty and forge connections with consumers by delivering emotional value. 

There has been repeated speculation in recent weeks that the US is trying to persuade Japan, and perhaps other Asian nations, to agree to a second ‘Plaza Accord’ - the 1985 agreement signed at the Plaza Hotel in New York at which Tokyo agreed to strengthen the yen in order to weaken a rampant dollar and boost US exports. However, did the original Plaza Accord actually fulfil its promise? This short but smart analysis from the Lowy Institute thinktank warns that such agreements often have unintended consequences.

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