The Mastercard Economics Institute (MEI) has released its annual economic outlook for 2026, projecting that the Asia Pacific (APAC) region will maintain steady growth despite a complex global backdrop of shifting trade policies, tariff uncertainties, and geopolitical tensions.
While global real GDP growth is expected to ease slightly to 3.1 per cent in 2026, down from an estimated 3.2 per cent in 2025, APAC stands out as a “global outlier of stability”. The report identifies consumer resilience, easing inflation, and accelerating investment in artificial intelligence (AI) as key pillars supporting the region’s economic durability.
Consumers prioritise experiences over goods
A defining trend for 2026 is the sustained momentum in experiential spending. MEI forecasts that travel will remain a robust economic engine for the region. In the first half of 2025, Singapore’s outbound travel spend was already $2.7billion higher than in 2019. Indonesia and the Philippines also led regional growth, with outbound travel spending surging by 40 per cent and 28 per cent respectively.
“The largely positive outlook for the region’s consumers highlights a defining feature of 2026: even as trade realignments and technological shifts dominate the global narrative, microeconomic conditions across much of Asia Pacific are improving,” said David Mann, chief economist, Asia Pacific, Mastercard.
Consumers are expected to remain “tech-enabled and value-conscious,” continuing to prioritise travel and live experiences while staying price-sensitive on essentials. This shift is notably reshaping retail in China, particularly in Tier 3 and 4 cities, where a trend toward “trading smart” is driving demand for unique lifestyle upgrades over purely low-cost goods.
Trade shakeup and AI acceleration
The report highlights a significant reorganization of global trade following tariff shifts in 2025. As the U.S. share of Chinese e-commerce sales fell from 28 per cent in 2024 to 24 per cent by August 2025, China has diversified its exports to new corridors. While this brings risks for exporters in Japan and South Asia facing softer external demand, APAC’s central role in global supply chains remains intact, with India and ASEAN playing expanding roles.
Technological progress is another major tailwind. South Korea, Japan, India, and Hong Kong SAR are showing strong momentum in the adoption of AI tools by both corporates and consumers. Governments across the region are supporting this transition with targeted industrial policies, including investments in AI hubs, data centers, and semiconductors.
Regional growth forecasts
- China: Forecast to grow at 4.5 per cent, supported by “new consumption” categories like wellness and fandom collectibles.
- India: Projected to expand by 6.6 per cent, driven by strong domestic demand and digital services growth.
- ASEAN-5: Growth is set to diverge, with the Philippines (5.6 per cent) and Indonesia (5.0 per cent) leading the pack, while Thailand lags at 1.8 per cent.
- Japan: Expected to grow 1.0 per cent as the economy shifts toward a more sustainable, wage-driven cycle.
- Australia & New Zealand: Lower interest rates are expected to lift household spending, with growth forecast at 2.3 per cent and 2.4 per cent respectively.
“While Asia Pacific’s outlook is broadly positive, the region faces a complex set of risks in 2026—from ongoing trade fragmentation and tariff pressures to external shocks,” added Mann. “How governments and businesses respond to these challenges will shape the next phase of growth.”
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