Asia Pacific Defies Global Headwinds: Mastercard Economics Institute 2026 Outlook

Consumer spending underpins the region's resilience amid trade shifts and accelerating AI

SINGAPORE, Dec. 10, 2025 /PRNewswire/ -- The Mastercard Economics Institute (MEI) today released its annual economic outlook for 2026, revealing that Asia Pacific's growth remains broadly stable even as the global economy adapts to rapid tariff changes, accelerating AI investment, and evolving consumer trends. Globally, MEI expects real GDP growth to ease marginally to 3.1 percent in 2026, compared to an estimated 3.2 percent in 2025.

MEI notes that the global outlook for 2026 is shaped by a two-sided set of risks and opportunities. Fiscal stimulus and rapid technological progress—particularly the integration of AI into business operations—are expected to act as major tailwinds for growth, though the benefits will be uneven across regions. At the same time, ongoing geopolitical tensions and the reconfiguration of supply chains continue to create pockets of fragmentation, adding uncertainty to trade and production. The uneven distribution of technological gains could create policy and growth hurdles for some markets.

Despite these crosswinds, MEI expects GDP growth across Asia Pacific to hold steady in 2026. A combination of easing inflation, supportive monetary policy and, in several markets, rising real incomes are improving household conditions and reinforcing the region's overall stability. Consumers will stay tech-enabled and value-conscious, prioritizing meaningful moments like travel and live experiences while remaining price-sensitive for essentials. Travel continues to be a strong economic engine, with both outbound and intra-regional tourism gaining momentum.

"Given its centrality to global trade, Asia Pacific has shown remarkable resilience at a time when tariff uncertainty and shifting supply chains have threatened to upend international commerce," said David Mann, chief economist, Asia Pacific, Mastercard. "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. For businesses, staying attuned to these underlying demand trends will be essential."

2026's Defining Economic Forces

Trade shakeup: New routes, new realities

Global trade continues to reorganize following 2025 tariff shifts, with the Chinese Mainland diversifying exports to new corridors as the U.S. share of Chinese e‑commerce sales fell from 28% in 2024 to 24% by August 2025. For Asia Pacific, this shift brings both risks and opportunities: markets importing more low‑cost goods from the Chinese Mainland are seeing disinflation in imported goods, while exporters in Japan and parts of South Asia face pressure from U.S. tariffs and softer external demand. Despite these realignments, Asia Pacific's position at the center of global supply chains remains intact, with India, ASEAN and the Chinese Mainland playing expanding roles as firms reconfigure sourcing and investment.

AI and policy: The next wave of growth

MEI's analysis shows AI adoption and targeted fiscal support as meaningful tailwinds in 2026. Within MEI's AI Spending Index, South Korea, Japan, India, and Hong Kong SAR show strong momentum in corporate and consumer uptake of AI tools. In parallel, selective industrial and infrastructure policies—including AI hubs, data centers, smart cities and semiconductor investment—are laying foundations for the next phase of digitization. Together, these shifts position Asia Pacific to benefit strongly from the global transition toward AI-enabled productivity.

Travel trends: experiences drive economic momentum

Travel remains one of Asia Pacific's most resilient economic drivers. In H1 2025, Singapore's outbound spend was USD 2.7 billion higher than in 2019, while Indonesia and the Philippines led regional growth with outbound travel spending up 40 percent and 28 percent, respectively. Inbound tourism across Japan and parts of ASEAN has normalized, while intra-regional travel is expanding as consumers prioritize experiences over goods. This momentum in leisure and experiential spending underscores the durability of Asia Pacific's services sector and its importance to the region's broader economic outlook.

Asia Pacific Outlook: 2026 Highlights

• Chinese Mainland is forecast to grow 4.5 percent, with consumption strengthening through the year as "new consumption" categories—beauty and wellness, lifestyle upgrades, and fandom-driven collectibles—gain momentum supported by expected rate cuts and targeted fiscal measures under the upcoming Five-Year Plan. The shift toward "trading smart"—where consumers seek quality and unique experiences rather than just low prices—is reshaping retail and digital channels, especially in Tier 3–4 cities such as Yantai and Luoyang.
• South Asia continues to show solid momentum. India is projected to expand 6.6 percent, supported by domestic demand, monetary easing and digital and services growth. Sri Lanka is expected to grow 3.7 percent as private consumption, rising tourism receipts and accommodative monetary policy sustain its recovery. Bangladesh is forecast to grow around 5 percent, with easing inflation and remittance inflows helping households despite ongoing structural challenges.
• Japan is expected to grow 1.0 percent, as rising real incomes and firmer household sentiment shift the economy toward a more sustainable, wage-driven cycle. Strategic investment in AI, semiconductors, and energy security continues, while accommodative monetary policy and selective fiscal measures help offset modest pressure on exports from U.S. tariffs.
• Across the ASEAN-5, growth is set to diverge. Indonesia and the Philippines are expected to remain among the region's fastest growers at 5.0 and 5.6 percent respectively. Meanwhile, Malaysia and Singapore should see growth normalize to 4.2 percent and 2.2 percent, while Thailand is forecast at 1.8 percent. Key risks include energy price volatility and shifts in global demand that may affect employment.
• In Australia and New Zealand, easing cost pressures and lower interest rates are expected to lift household spending, with growth forecast at 2.3 and 2.4 percent. Experiential spending continues to drive recovery, with consumers prioritizing travel, leisure, and accessible entertainment.
• Across the region, SMEs are leaning into digital tools and online channels to streamline operations and reach customers, reinforcing resilience amid changing trade dynamics.

"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 and disparities in technological progress," added Mann. "How governments and businesses respond to these challenges will shape the next phase of growth. The ability to adapt, invest in digital readiness, and tap into evolving consumer demand will be critical for success."

MEI's Economic Outlook 2026 covers 12 Asia and Oceania markets^[1], and draws on multiple public sources and Mastercard's aggregated and anonymized transaction data, alongside MEI models estimating economic activity. Additional reports and insights from MEI can be found here.

About the Mastercard Economics Institute

The Mastercard Economics Institute provides insights into global and local economic trends using advanced analytics and Mastercard's proprietary data assets. Established in 2020, MEI supports businesses, governments, and policymakers with economic monitoring services and timely analysis on economic themes including consumer spending, retail and travel trends, and other local and global barometers of economic performance. MEI offers valuable perspectives to inform decision-making and promote sustainable growth worldwide through our thought leadership series, and through Mastercard's specialized product offerings.