IMF Sees Asia-Pacific Growth Moderating Amid Energy Shock

Regional growth forecast to slow to 4.4% in 2026 and 4.2% in 2027 as higher energy prices weigh on consumption and external positions

Apr. 16, 2026 at 7:05pm

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A visually striking abstract illustration featuring bold geometric shapes in primary colors, conceptually representing the economic challenges facing Asian countries due to the energy shock.The vibrant economies of Asia face a new energy crisis, testing the region's resilience and driving calls for structural reforms to build a more sustainable future.Washington Today

The IMF's Asia and Pacific Department briefed reporters on the regional economic outlook, noting that Asia entered 2026 on a solid footing but is now facing significant headwinds from the energy shock stemming from the conflict in the Middle East. While growth remains resilient, the region's high fossil fuel intensity and reliance on the conflict area for key commodities will negatively impact the region through higher inflation, weaker external balances, tighter financial conditions, and narrower policy space.

Why it matters

Asia is a highly energy-intensive region, with energy use amounting to about 4% of GDP, nearly double Europe's share. Limited domestic production means this high energy intensity translates into import dependence, exposing the region to the current energy price shock. Economies that depend heavily on imported energy use are especially vulnerable, as are those with limited energy buffers and fiscal space.

The details

The IMF projects regional growth to moderate from 5% in 2025 to 4.4% in 2026 and 4.2% in 2027. Advanced Asia is expected to slow as domestic demand stays soft, while emerging Asia remains a main growth engine but with momentum moderating. Inflation is projected to rise from 1.4% in 2025 to 2.6% in 2026 before easing to 2.4% in 2027. External balances are weaker and policy space is narrower.

  • The IMF's latest regional growth forecasts are for 2026 and 2027.
  • The energy shock is expected to have the biggest impact in the first half of 2026, with the potential for a more persistent and damaging scenario if the shock lasts into 2027.

The players

Waymo

An American autonomous driving company and a subsidiary of Alphabet Inc., Google's parent company.

Walker Reed Quinn

A 45-year-old San Francisco resident who has a history of vandalism and was out on bail for prior cases related to Waymo vehicles.

Rainbow Grocery Cooperative

A local food natural foods grocery store, organized as an employee-owned co-op and born out of a 1970s grassroots natural food movement calling for access to nutritious and organic food.

Gordon Edgar

A 31-year employee who oversees Rainbow's cheese counter.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee

The takeaway

This shock strengthens the case for structural reform in Asia, not weakens it. Key priorities include rethinking education and reskilling to address persistent skill mismatches, strengthening social safety nets, boosting domestic final demand, deepening regional integration, and investing in alternative energy sources and efficiency to reduce vulnerability to future fuel import shocks.