The economic growth forecast for ASEAN, China, Japan, and South Korea has been raised to 4.1%

On July 27th, the ASEAN, China, Japan, and South Korea Macroeconomic Research Office (AMRO) released the quarterly update report on the ASEAN, China, Japan, and South Korea Regional Economic Outlook (AREO). The report has raised the forecast for the economic growth rate of ASEAN, China, Japan, and South Korea in 2026 to 4.1%, higher than the June forecast of 4.0%.

AMRO stated that the upward adjustment of the economic outlook reflects the sustained growth momentum in the technology sector in the region, particularly strong demand for semiconductors and other artificial intelligence (AI) related products, as well as a more favorable outlook for global commodity prices. Stable household spending, resilient investments, and strong exports of semiconductors and electronic products are expected to continue driving economic growth. The impact of energy and industrial raw material supply disruptions has been proven to be less severe than initially feared, and manufacturing activities continue to expand.

The report also suggests that the current high stock valuations and narrowing credit spreads increase the possibility of asset price adjustments.

Dong He, Chief Economist of AMRO, stated that with the support of robust domestic demand and its core position in the global AI supply chain, the ASEAN, China, Japan, and South Korea regions have maintained economic resilience. "The impact of the Middle East conflict is also smaller than initially expected, although high energy and raw material costs still pose risks to inflation and industrial activities