According to a Knight Frank report, the Asia-Pacific economy has remained resilient in 2025, with growth holding steady relative to 2024. A key factor supporting this is the frontloading of exports before the tariff implementation, which was introduced by US President Donald Trump, has given economies in the region some breathing room. Yet, this support will cease in 2026, and the full impact of Trump’s tariffs is likely to emerge in the coming year to produce a more pronounced drag on investment activity and labour markets.

Consequently, Asia-Pacific GDP growth is expected to slow to 4.1% in 2026, from 4.5% in 2025. Still, the report maintains a positive outlook, suggesting that the extent of the slowdown will be manageable. Most economies are expected to see growth soften by less than 1 per cent. Heavily plugged into the tech cycle, Taiwan and Singapore are expected to see growth cool at a faster pace in 2026, largely due to a stronger-than-expected performance in 2025.

The report stated that the demand for artificial intelligence (AI) technology is driving Taiwan’s economy to expand at its fastest pace in 15 years, at over 7%, in 2025. South Korea is the only trade-reliant economy to see growth picking up, aided by a ₩31.8 trillion (US$23.3 billion) supplementary budget to stimulate growth. Growth in New Zealand is expected to improve following an aggressive easing cycle in 2025, while domestic consumption will support the populous economies of the Philippines and Indonesia. Meanwhile, momentum in Australia could be curtailed if inflationary pressures prove to be sticky, thus compelling its central bank to act. Still, largely powered by its emerging economies, the region will continue to remain a global growth driver. 

Most central banks in the region have cut policy rates since 2024. With the easing cycle likely at its tail end in 2026, the magnitude of rate cuts will be relatively modest. Nevertheless, monetary and fiscal stimulus will still have sufficient flexibility to remain supportive should external conditions deteriorate. The report said that as inflation has slowed, and with the Fed likely to ease again in 2026, most central banks in the region will have room to manoeuvre. 

The recent strengthening of regional currencies against the US dollar further eases imported inflation pressures, allowing for calibrated cuts and a stable environment for real estate markets. Alongside the region’s long-term growth drivers is an AI-driven cycle that will continue to fuel growth by boosting tech exports and strengthening intra-regional trade. Investments in AI-related equipment, facilities, and data centres have supported robust performance through 2025. Key Asian economies – including Taiwan, South Korea, Singapore, Malaysia, Thailand, and Vietnam – integral to the global tech supply chain are benefiting from sustained global technology spending.