China is one of the few major economies to receive a growth upgrade this year, with its 2026 forecast raised by 0.2 percentage points to 4.6 percent, even as the outlook for the world economy was trimmed amid the fallout from the war in the Middle East.
The revision came in the International Monetary Fund’s (IMF) July update to its World Economic Outlook, which projects global growth of 3 percent in 2026, down 0.1 percentage point from April, before a recovery to 3.4 percent in 2027.
The Fund said the global slowdown reflects the war’s negative supply shock, partly offset by ‘accelerated demand-driven momentum in the global technology cycle’ linked to artificial intelligence. China’s first quarter expansion beat expectations at 8.1 percent on the IMF staff’s seasonally adjusted estimates, driven by front-loaded infrastructure investment and high-tech manufacturing and exports, even as domestic consumption remained soft.
Despite the upgrade, the 4.6 percent projection still marks a slowdown from 5 percent growth in 2025, with higher oil prices, protracted uncertainty and structural headwinds expected to weigh on activity. Growth is forecast to ease to 4.1 percent in 2027.
The picture across the Asia-Pacific is mixed. South Korea’s 2026 forecast was raised by 0.7 percentage points to 2.6 percent, buoyed by strong external demand for semiconductors.
Malaysia is projected to grow 4.7 percent, benefiting from data center activity, while Thailand was revised up by 0.4 percentage points to 1.9 percent on emergency fiscal measures and technology-related exports.
Conversely, the Philippines was cut by 0.2 percentage points to 3.9 percent for 2026, though growth is seen rebounding to 5.5 percent in 2027. Australia was trimmed by 0.1 percentage point to 1.9 percent, easing to 1.7 percent in 2027. Singapore was not broken out individually; the ASEAN-5 group, which includes the city-state alongside Indonesia, Malaysia, the Philippines and Thailand, is projected to grow 4.1 percent.
Looking ahead, the IMF said risks are more balanced than in April but still tilted to the downside, warning that renewed Middle East conflict could extend commodity price volatility.
