Asia Pacific’s economic growth is expected to remain broadly stable in 2026, even as the global economy adjusts to tariff shifts, accelerating artificial intelligence (AI) investment and changing consumer behavior, according to the Mastercard Economics Institute’s (MEI) annual outlook released today.
Globally, MEI forecasts real GDP growth of 3.1 percent in 2026, a slight slowdown from an estimated 3.2 percent in 2025. The outlook reflects a balance of risks and opportunities: fiscal stimulus and rapid technological progress—especially the integration of AI into business operations—are likely to support growth, while geopolitical tensions and ongoing supply-chain reconfiguration add uncertainty to trade and production.
Against this backdrop, Asia Pacific stands out for its resilience. Easing inflation, supportive monetary policy and improving real incomes in several markets are strengthening household conditions and underpinning regional stability. Consumers are expected to remain tech-savvy and value-conscious, prioritizing experiences such as travel and live events while staying price-sensitive on essentials.
“Asia Pacific has shown remarkable resilience at a time when tariff uncertainty and shifting supply chains have threatened to disrupt global commerce,” said David Mann, chief economist for Asia Pacific at Mastercard. “Even as trade realignments and technological shifts dominate the global narrative, underlying consumer conditions across much of the region are improving.”
Trade, AI and travel shape the outlook
Global trade continues to reorganize following tariff changes in 2025. The Chinese Mainland has been diversifying its export routes, as the U.S. share of Chinese e-commerce sales declined from 28 percent in 2024 to 24 percent by August 2025. For Asia Pacific, the impact is mixed: some markets are benefiting from lower imported-goods inflation, while exporters in Japan and parts of South Asia face pressure from U.S. tariffs and softer external demand. Even so, the region’s central role in global supply chains remains intact, with India, ASEAN and the Chinese Mainland playing expanding roles.
AI adoption and targeted fiscal support are expected to be key growth drivers in 2026. MEI’s AI Spending Index points to strong momentum in South Korea, Japan, India and Hong Kong SAR, supported by investment in AI hubs, data centers, smart cities and semiconductors. These trends position Asia Pacific to benefit from the next phase of AI-enabled productivity.
Travel remains one of the region’s strongest economic engines. In the first half of 2025, Singapore’s outbound travel spending exceeded pre-pandemic levels by USD 2.7 billion, while Indonesia and the Philippines recorded increases of 40 percent and 28 percent, respectively. Inbound tourism has largely normalized in Japan and parts of ASEAN, and intra-regional travel continues to expand as consumers favor experiences over goods.
Country and subregional highlights
MEI forecasts Chinese Mainland growth of 4.5 percent in 2026, supported by strengthening consumption and targeted fiscal measures. India is projected to grow 6.6 percent, driven by domestic demand and digital and services expansion, while Japan is expected to grow 1.0 percent as rising real incomes support a more sustainable, wage-led cycle.
Across ASEAN, growth is set to diverge. Indonesia and the Philippines are expected to remain among the fastest-growing economies, while Malaysia and Singapore see more moderate expansion and Thailand lags. Australia and New Zealand are forecast to grow around 2.3–2.4 percent, aided by easing cost pressures and stronger household spending.
“While the outlook is broadly positive, Asia Pacific faces a complex mix of risks,” Mann said. “The ability of governments and businesses to adapt, invest in digital readiness and respond to evolving consumer demand will shape the region’s next phase of growth.”
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