Boao Report: Most Asian stock indices are expected to remain on the rise this year

Ask AI · Why are stock indices still expected to rise despite the slowdown in Asian economic growth?

On March 24, the Boao Forum for Asia held a press conference and flagship report release for the 2026 annual meeting, where the “2026 Annual Report on Asian Economic Outlook and Integration Process” was released.

The report indicates that the GDP of Asian economies will continue to account for an increasing share of the world economy, and Asia remains a major engine of global economic growth.

Specifically, the report points out that due to factors such as increasing uncertainty in the international trade environment, rising global debt pressures, and escalating geopolitical risks, the global economic growth rate is expected to slow down in 2026. Against this backdrop, the economic growth rate in Asia may also slightly decline, with an expected growth rate of 4.5% in 2026, down from 4.7% in 2025. At the same time, the GDP of Asian economies continues to rise as a share of the world economy, remaining a major growth engine, projected to increase from 36.1% in 2025 to 36.3% in 2026 in nominal US dollars; in terms of purchasing power parity, it is expected to rise from 49.2% in 2025 to 49.7% in 2026. By region, East Asia’s economic growth rate is expected to be 4.3% in 2026, slightly lower than 4.4% in 2025; South Asia’s growth rate is expected to be 6.3%, down 0.4 percentage points from 2025, still the fastest-growing region in Asia; Central Asia’s growth rate is expected to be 5.3%, down 0.5 percentage points from 2025; West Asia’s growth rate is expected to be 2.5%, down 0.4 percentage points from 2025. The economic growth in West Asia faces more uncertainties.

Amidst the global economic slowdown and increasing policy uncertainty, the global labor market demonstrates unexpectedly strong resilience. Due to the employment situation in Central Asia, the employment growth rate in Asia is below the global overall growth level. The unemployment rate in Asia shows a gradual upward trend, but overall remains better than the global level. Technological advancements and artificial intelligence may pose severe challenges to youth employment but may also improve job prospects for informal workers. Women in Arab countries may benefit more from artificial intelligence. Looking towards 2026, the labor market and income are influenced by long-term trends such as demographic changes, as well as short-term factors like global trade turmoil and geopolitical risks. The unemployment rate in Asia is expected to remain stable overall, but some regions face significant unemployment pressures. Additionally, rising uncertainty in trade rules and supply chain bottlenecks bring considerable uncertainty to the Asian economic outlook and are eroding worker incomes, with Southeast Asia and South Asia potentially facing particularly noticeable impacts.

In terms of prices, inflation in Asian economies has significantly receded. The regional average inflation rate fell to 3.5% by December 2025. Some economies are experiencing high inflation, with countries like Iran, Turkey, Myanmar, Lebanon, and Kazakhstan facing severe inflationary pressures. Influenced by commodity prices, wage levels, and exchange rate trends, overall inflation in Asia is expected to remain stable in 2026 but may be slightly higher than in 2025.

The report notes that in the financial markets, Asian economies generally performed well. In 2025, the vast majority of Asian economies’ stock indices continued to rise. Most Asian economies’ currencies appreciated. The ten-year government bond yields in Asian economies have seen more declines than increases. The non-performing loan ratio in the banking sector of most Asian economies has decreased, but Bangladesh’s banking sector has a relatively high and significantly increasing non-performing loan ratio.

Looking ahead to 2026, influenced by multiple factors such as macroeconomic conditions, the Federal Reserve beginning a rate-cutting cycle, US government foreign policy, and geopolitical risks, the financial markets of Asian economies will face considerable uncertainty, but most stock indices are still expected to maintain an upward trend. Most economies’ currencies may continue to appreciate. The ten-year government bond yields will show significant divergence. The banking sector is expected to operate relatively robustly, with risks generally under control.