China’s economic solidity in 2025
Despite the headwinds facing the world economy, the International Monetary Fund (IMF) recently raised its global growth forecast for 2025, including a notable upward revision for China.
Indeed, China’s economic performance in the first half of this year exceeded expectations: Its GDP grew by 5.3 percent year-on-year — 0.3 percentage points faster than the 2024 pace. Key economic indicators remained stable: unemployment and prices held steady, high-tech output jumped by 9.5 percent, and consumption contributed 52 percent of growth.
Given the challenging external conditions, what explains the resilience of the Chinese economy? The following three reasons deserve closer examination:
China’s sustained efforts to boost innovation and develop new-quality productive forces are paying off. In the first half of 2025, value-added output in high-tech industries grew by 9.5 percent, accounting for nearly a quarter of large-scale industrial expansion. High-tech goods exports increased by 9.2 percent, while cross-border e-commerce reached RMB 1.32 trillion yuan (up 5.7 percent) and total services trade hit RMB 3.89 trillion yuan (up 8.0 percent). These developments highlight innovation as the primary driver of China’s economic growth and export diversification.
In Yunus-led Bangladesh, glimmers of economic hope
By the time a student-led protest movement erupted into a full-scale revolution in Bangladesh in July 2024, the country’s economy was already in free fall.
Years of rampant corruption, mismanagement and dwindling opportunities for young people – not to mention the brutal repression of its then-autocratic government – had left the country’s financial institutions on their knees.
The banking system teetered on the brink of collapse under the weight of massive bad loans and capital flight. Meanwhile, foreign reserves dwindled due to a worsening trade deficit and declining remittances from Bangladeshi migrant workers abroad.
The immediate aftermath of the toppling of autocratic leader Sheikh Hasina after 36 days of protest suggested that the country’s new leaders faced an unenviable task righting the economy. Law and order disintegrated, as large segments of the police and other law enforcement agencies — loyalists of the overthrown government — disappeared into hiding.
Meanwhile, several actions of India, Bangladesh’s powerful neighbor and major trading partner, further destabilized an already volatile situation. The government in New Delhi, which had been close to the Hasina government, began exerting economic, political and diplomatic pressure on Bangladesh after providing refuge to numerous leaders and activists from the deposed administration, including Hasina herself.
Despite this gloomy picture, however, things look brighter a year on. As an expert on international economics and Bangladeshi politics, I believe Bangladesh has achieved a remarkable degree of economic and political stability under Muhammad Yunus’s caretaker government.
Yet massive domestic and international challenges persist and will need careful handling in the months and years to come.
At the urging of the student leaders leading last year’s protest movement, Yunus became the de facto leader of Bangladesh’s interim government on August 8, 2024.
The 2006 Nobel laureate, renowned for his pioneering work in microloan and social business, formed a transitional administration comprising technocrats, civil society leaders and student representatives.
Its stated goals were restoring order, organizing free and fair elections, implementing democratic reforms and bringing accountability to those responsible for the killings of political activists during Hasina’s reign.
Green industrialization: major to achieving 8 pc economic growth, climate agenda
Manufacturing industries are pivotal to achieving the 8 percent economic growth target set by the Prabowo Subianto administration as Indonesia’s economy heavily relies on extractive industries, domestic consumption, and government spending.
However, extractive industries, which depend on natural resources like coal, cannot lead to sustainable prosperity and are incompatible with the government’s goal of achieving net-zero emissions by 2050.
Tata Mustasya, Executive Director of the Sustainable Welfare Foundation Indonesia (SUSTAIN), emphasized that the manufacturing sector, particularly, has been stagnating since the early 2000s, coinciding with the rising dominance of extractive industries like coal.
“Manufacturing industries can play a dual role: supporting the achievement of the 8 percent growth target and promoting welfare, while also contributing to the 2050 Net-Zero Emission target. Here, green industrialization is key,” Tata said as quoted in a statement on Tuesday, August 12, 2025 .
The global shift towards a green economy presents numerous opportunities, and Indonesia risks becoming merely a market if it fails to embrace green industrialization.
First, existing manufacturing industries must transition to using clean and renewable energy to reduce emissions. According to a recent survey “Powering up: Business perspectives on shifting to renewable electricity”, nine out of 10 Indonesian business leaders seek an energy transition, particularly in the electricity sector, from coal and other fossil fuels to renewable energy by 2035 or earlier.
Moreover, most respondents are considering relocating their businesses and supply chains to other countries if the Indonesian government fails to provide renewable energy.
In its latest General Electricity Supply Plan (RUPTL 2025-2034), the government has set a significant renewable energy target, aiming for 61 percent of total power generation capacity to come from renewable sources in the next decade, up from the previous target of 52 percent. The development of electric vehicle manufacturing hubs in West Java will also be supported by clean, renewable energy sources like wind power.
Ex-IMF economist advises Japan to strengthen non-U.S. ties
Former International Monetary Fund Chief Economist Maurice Obstfeld has advised Japan to strengthen its cooperation with Asian and European countries, given disruptions to the global economic and financial order caused by U.S. policies.
In a recent interview with Jiji Press, Obstfeld expressed concern that U.S. President Donald Trump’s administration has taken policy measures, including high tariffs and tax laws, that expand the federal debt and unpredictability, thereby undermining confidence in the dollar.
He also said such actions are driving trade partners to deepen integration with countries other than the United States.
“It will ultimately look attractive to countries to divert their trade links toward deeper integration with other trade partners, just in the interest of protecting themselves from mercurial U.S. policies,” Obstfeld explained.
Looking forward, Obstfeld stated, “The world is not going to return for a long time, if ever, to what it was before 2017,” when the first Trump administration was inaugurated.
Given this, Obstfeld urged Japan to strengthen its economic partnerships, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and regional frameworks such as ASEAN Plus Three, whose members are the 10-country Association of Southeast Asian Nations as well as Japan, China and South Korea.
Regarding the future of the international monetary system, Obstfeld predicted a “multipolar” era in which the dominance of the U.S. dollar as the key currency would slightly decline, while the presence of the euro and the Chinese yuan would grow.
Citing U.S. policies that could undermine confidence in the dollar, he assessed that the yuan, in particular, has significant potential for the future.
Obstfeld is a senior fellow at the Peterson Institute for International Economics. He has also served as an international adviser to the Bank of Japan’s Institute for Monetary and Economic Studies.
For 2026 Malaysia’s finance ministry forecasts steady economic growth
Amid uncertainties in global trade and weak external demand, Malaysia’s Ministry of Finance projects the country’s economy to grow at a moderate pace in 2026.
In its Pre-Budget Statement 2026, the ministry stated that growth will be anchored by resilient domestic demand, particularly through private investment, stable employment, and income-enhancing measures such as targeted cash transfers and wage increases. The tourism sector, driven by Visit Malaysia 2026, is also set to contribute significantly to services growth. In this context, Budget 2026 will prioritise strengthening domestic sources of growth, diversifying export markets, and expanding household income opportunities.
Public investment will be advanced through strategic projects under the 13th Malaysia Plan (13MP) and increased domestic direct investment (DDI) by government-linked investment companies (GLICs) through the Government-linked Enterprises Activation and Reform Programme (GEAR-uP), reinforcing the foundations for inclusive and sustainable economic resilience.
In the first quarter of 2025, gross domestic product (GDP) expanded 4.4 percent, driven by household consumption, investment and the construction sector. The momentum is expected to continue in the second quarter of 2025, with an advance estimate indicating growth at 4.5 percent. Despite global developments, the Malaysian economy remained resilient and is projected to expand by 4-4.8 percent in 2025. Inflation abated further to 1.1 percent in June from 2 percent in the previous year, marking the lowest pace in 52 months.
Meanwhile, the labour market continued to strengthen, with the national unemployment rate declining to 3 percent in May, down from 3.3 percent in May last year.
On currency, the ringgit emerged as one of Asia’s best-performing currencies as at August 6, appreciating 5.8 percent to 4.2270 MYR against the US dollar.
India-Maldives reset
The recent development in India-Maldives relations holds an essential strategic move in India’s foreign policy. Along with a goodwill gesture, it signifies India’s reassertion of primacy in the Indian Ocean, where China’s presence is evident through its persistent influence. This reset of relations gives the Maldives India’s economic generosity with robust security cooperation and people-to-people connections, pushing away China’s approach of “debt-trap” diplomacy and transactional approach.
Maldives, apart from being a tourist paradise, holds a critical strategic position at the Indian Ocean sea lanes, which results in the world’s most essential maritime routes for commerce and energy. For India, the Maldives provides a vital security outpost against China’s military cooperation agreements.
Despite economic growth, revenue collection stays slow
While Nepal’s economy shows steady growth across most indicators in recent years, the country’s revenue collection has failed to keep pace, raising concerns about tax leakage and informal economic activities.
According to the Ministry of Finance, except for a few years, Nepal’s GDP has consistently risen over the past decade. Key indicators such as foreign trade, new industrial registrations, remittance inflows, credit flow, government expenditure, social security payments, and pensions have all increased steadily.
However, despite growth in these economic activities, state revenue, particularly customs and tax collection, has not increased proportionally.
Data from the last five fiscal years show an overall rise in imports and exports. For example, import values grew from Rs 1.53 trillion in FY 2020/21 to Rs 1.80 trillion in FY 2024/25. Yet, customs revenue increased only marginally from Rs 420 billion to Rs 477 billion in the same period.
The Inland Revenue Department reports a significant rise in the number of registered taxpayers, including business Permanent Account Numbers (PAN), individual PANs, and VAT registrants. The number of registered industries also rose from 203 in FY 2020/21 to 622 in FY 2024/25.
Despite this, total tax revenue increased slowly, from Rs 429 billion in FY 2020/21 to Rs 577 billion in FY 2024/25—indicating challenges in fully capturing economic activities.
Remittance inflows have grown nearly one-third over the past five years, reaching NPR 1.53 trillion as of the latest data. While this has improved foreign exchange reserves and trade balance, much of the money is spent on consumption, with unclear impact on tax revenues.
A High-Level Economic Reform Commission report highlights that about 40 percent of Nepal’s economy operates informally, outside tax purview. Widespread tax evasion practices include lack of billing, customs leakages, and collusion among officials, contributing to revenue shortfalls.