S&P Global Ratings keeps 2025 APAC growth forecast unchanged at 4.1%

Better growth at the end of 2024 will lift China's 2025 gross domestic product (GDP) gains; this year's growth target and fiscal stimulus for the country are more ambitious than the rating agency had expected.

While US-led trade friction will weigh on the ex-China APAC economies, S&P Global Ratings expects domestic demand momentum to mostly remain solid, generally leading to only modest downward revisions to GDP forecasts.

Still, as the growth outlook softens and inflation is likely to stay moderate, central bankers in the region will increasingly be willing to risk some currency depreciation and cut policy rates.

APAC economies will feel the strain of rising US tariffs specifically and a pushback on globalisation more generally. However, S&P Global Ratings sees domestic demand momentum broadly holding up, especially in the region's emerging-market economies.

Given the volume of policy measures and external pressures hitting APAC, the robustness of the agency’s forecasts underscores the resilience of the regional economies.

The rating agency expects China's central bank to cut its policy rate by 20 basis points in 2025, which is 20 bp less than we assumed previously. Still, it expects policymakers to strive for solid credit growth.

Australia, Indonesia, New Zealand and the Philippines should be less at risk of US tariffs, as they generally have low import tariffs, no major bilateral goods surplus with the United States, S&P Global Ratings said in a release.

As tariffs tend to be levied on goods, trade will be more resilient in economies where a substantial share of exports is of services. This is the case for the Philippines and, especially, India.

Still, all of Asia-Pacific will feel the indirect impact of tariff turmoil. Slower growth internationally as a result of trade friction and the associated uncertainty will weigh on the region’s exports.

Also, Asian manufacturers will feel pressure from Chinese manufacturers, as Chinese producers seek alternatives to the US market, S&P Global Ratings added.

ALCHEMPro News Desk (DS)