Page 11 - Policy & Economic Report - July 2025

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across Asia-Pacific economies, although investment associated with the global technology cycle remains
an important source of resilience.

• United States: Growth is projected at 2.3 per cent in 2026 and 2.2 per cent in 2027, remaining
broadly unchanged from the April projections. Economic activity is expected to be supported by
continued business investment in artificial intelligence and digital technologies, accommodative
financial conditions, and fiscal support. As a net energy exporter, the United States is expected to
remain relatively insulated from higher global energy prices.

• Euro Area: Growth is projected at 0.9 per cent in 2026 and 1.2 per cent in 2027. The 2026 forecast
has been revised downward from April, reflecting weaker first-quarter momentum, subdued
consumer confidence, and the adverse effects of higher energy prices despite fiscal support
measures adopted by several member states.

• Japan: Growth is projected to moderate to 0.6 per cent in 2026, before improving slightly to 0.7
per cent in 2027. Fiscal support measures are expected to cushion the impact of higher energy
prices, while growth is likely to strengthen gradually as energy market conditions normalise.

• United Kingdom: Growth is projected to moderate to 0.6 per cent in 2026, before improving
slightly to 0.7 per cent in 2027. Fiscal support measures are expected to cushion the impact of
higher energy prices, while growth is likely to strengthen gradually as energy market conditions
normalise.

• Canada: Growth is expected to moderate to 1.1 per cent in 2026 before recovering to 1.7 per cent
in 2027. Slower population growth, weak private investment, and continued trade uncertainty are
expected to constrain economic activity, although resilient household consumption and improved
terms of trade are likely to support the recovery.

July 2026 Growth Forecast - Emerging Market and Developing Economies

Emerging Market and Developing Economies (EMDEs) are expected to continue growing faster than
advanced economies, although growth is projected to moderate amid elevated energy prices, tighter
global financial conditions, and persistent geopolitical uncertainty. According to the IMF, EMDE growth is
projected to slow to 3.8 per cent in 2026 before strengthening to 4.5 per cent in 2027, reflecting
significant variation across countries depending on commodity dependence, exposure to geopolitical
developments, tourism and remittance inflows, and integration into global technology supply chains.

The Asian Development Bank presents a similar assessment for developing Asia and the Pacific, revising
regional growth downward to 4.9 per cent in 2026 from the 5.1 per cent projected in April, primarily due
to prolonged energy market disruptions, higher production costs, weaker external demand, and
heightened geopolitical uncertainty. Growth is expected to improve to 5.1 per cent in 2027 as energy
markets stabilise and supply-chain pressures gradually ease.

• China: Growth is projected to moderate to 4.6 per cent in 2026 as higher oil prices, subdued
domestic consumption, and structural challenges continue to weigh on activity. Nevertheless,
continued expansion in high-technology manufacturing and supportive industrial policies are
expected to sustain economic growth.

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