The International Monetary Fund (IMF) has called on Asian countries to reduce non-tariff barriers and move toward deeper regional trade integration. According to the IMF, this approach would help the region cushion the impact of United States tariff policies and global financial shocks.
In its latest Asia-Pacific Regional Economic Outlook, the IMF notes that economic growth in Asia continues to rely heavily on trade. China remains a crucial supply chain hub for global markets. However, rising trade tensions with the United States and tariff restrictions are increasing concerns about risks to Asia’s export-driven economies.
The report highlights that ongoing US-China disputes, along with growing investment in artificial intelligence (AI), have already encouraged stronger intra-Asian trade. The IMF says there is a significant opportunity for Asian economies to further strengthen cooperation. It recommends removing non-tariff restrictions, improving trade rules, and ensuring a more supportive business environment across the region.
The organization also stresses reforms in the services sector, strengthening investment efficiency, and policies to address the effects of aging populations. These improvements can support more balanced and stable economic growth over the medium term.
Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, explains that Asia is highly integrated when it comes to the trade of intermediate goods, with around 60 percent of regional exports staying within Asia. However, only about 30 percent of finished products are traded within the region, indicating ongoing reliance on markets in the US and Europe.
The IMF believes that a broad regional trade agreement, similar to the European Union’s framework, could deliver major economic benefits. It argues that many existing bilateral deals create repeated rules and inconsistent standards that hold back progress.
Non-tariff barriers have increased across Asia since the COVID-19 pandemic. The IMF says removing these barriers would lower costs, diversify export markets, and provide stronger protection against external trade shocks.
The IMF forecasts that Asia’s economy will grow by 4.5 percent in 2025, slightly below the 4.6 percent growth recorded last year but still 0.6 percentage points higher than its previous projection. The stronger outlook is linked to increased exports ahead of potential US tariff hikes. However, growth is expected to slow to 4.1 percent in 2026, due to weaker demand in China, ongoing trade tensions, and slower private consumption in emerging economies.