HSBC Asset Management – Asia Outlook: Charging Ahead in the Year of the Horse

This report provides a high-level overview of the recent economic environment in Asia, focusing on the year 2026.

It discusses Asia's resilience amid increased trade and geopolitical tensions, global policy uncertainty, and developed market bond volatility during 2025. The region is adapting to a complex global geoeconomic landscape and is at the forefront of the global artificial intelligence revolution. Economic prospects remain broadly solid with divergence across economies in growth and policy paths. Fiscal policy in emerging market Asia is expected to respond to growth disappointments as monetary easing cycles end. Factors contributing to Asia's resilience include lower-than-feared tariff rates, US-China trade truce, trade agreements, supply-chain reconfiguration, AI-led exports and investment, and policy easing. Disinflation and lower energy prices have helped real incomes and eased firms' costs. Financial conditions improved in 2025 due to monetary easing, credit spread compression, equity gains, weaker USD, and looser fiscal policy. Asia’s trade has adapted with strong AI-driven capital expenditure boosting tech exports and regional trade, while non-AI/non-tech goods trade remains subdued.