China economic rebalancing
China is paradoxical. Two incredibly different narratives can be correct at the same time: its economy is slowing sharply, and its exporters are becoming an even bigger competitive force.
But this contradiction is not really a contradiction. A development model that helped turn China into the world’s second-largest economy – built on high investment, weak household consumption and powerful industrial policy – can hit its limits without disappearing overnight.
As the old growth engine sputters, Beijing is leaning harder on exports and industrial upgrading to keep growth stable. For South Korea, that means the short-term problem is not just that China buys less. It is also that China sells more, and increasingly in the very product categories the Koreans depend on.
While the short-to-medium-term impact on Korean industrial giants will be great, the transition will not last forever. If China ultimately succeeds in rebalancing toward consumption, South Korea – and the world – could benefit from a larger, more open Chinese market and a global economy with more demand.
China’s development should be a bit familiar to any Koreanist: a rapid, sustained rise in GDP and living standards built on a close, collaborative relationship between the state and business, guided by industrial policy in high-value-added sectors and funded by high savings and constrained wages.
Malaysia: leveraging the investment upcycle for durable growth
he Malaysian economy has demonstrated notable resilience despite rising global trade protectionism and geopolitical tensions. Robust electronics exports and AI-related investment have supported growth, reflecting Malaysia’s entrenched position in global semiconductor and electronics value chains and its gains from the ongoing global tech upcycle. Political stability as well as policy clarity and credibility have reinforced investor confidence. Sustaining this investment momentum will require preserving macroeconomic and financial resilience, deepening domestic capabilities, and strategically positioning Malaysia as a trusted hub amid geoeconomic fracturing.
This preliminary assessment follows AMRO’s Annual Consultation Visit to Malaysia from January 26 to February 6, 2026. The mission was led by Lead Economist Kian Heng Peh. AMRO Director/CEO Yasuto Watanabe and Chief Economist Dong He participated in the policy discussions and met with Bank Negara Malaysia (BNM) Governor Dato’ Sri Abdul Rasheed Ghaffour and Deputy Minister of Finance Liew Chin Tong.
“Malaysia’s economy outperformed expectations in 2025, supported by robust domestic demand and the global tech upswing,” said Mr. Peh. “Growth is expected to remain firm in 2026, moderating slightly to 4.6 percent from the estimated 4.9 percent in 2025 amid persistent external headwinds.”
Inflation has remained low, reflecting contained cost pressures and limited pass-through from subsidy rationalization and the broadened sales tax and service tax (SST). Headline inflation is projected to average 2.0 percent in 2026, with price pressures expected to remain contained.
Sri Lanka’s economic revival
Sri Lanka is moving from crisis recovery to investment positioning, as stabilising macro fundamentals and reform momentum begin to attract global capital — including fresh interest from the UAE and the wider Middle East.
After emerging from its 2022 financial crisis, the island economy is showing signs of a broad-based recovery supported by tourism inflows, remittances and improving fiscal discipline.
International lenders and economists say the shift from crisis management towards investment-led growth is becoming increasingly visible.
Sri Lanka’s central bank expects the economy to remain on track despite damage caused by cyclone Ditwah, with growth forecast at 4-5 percent this year and inflation stabilising around the bank’s 5 percent target.
David Sislen, Division Director for Maldives, Nepal and Sri Lanka at the World Bank, says the recovery has been stronger than expected.
“Sri Lanka has made remarkable progress since the crisis. The country has experienced a broad-based economic recovery, supported by consumption and investment, robust remittances and tourism inflows, and significant revenue improvements.”
Sislen notes that inflation has come down to low single digits since the 60-70 percent levels of late 2022.
“This allowed a sustained easing of monetary policy, resulting in a downward adjustment of lending rates and a sharp pick-up in private sector credit growth,” he says.
India’s central bank keeps policy rates steady at 5.25pc
India’s central bank on Friday kept its policy rates steady, as trade deals with the E.U. and the U.S. are set to support the world’s fastest growing large economy.
Economists polled by Reuters had forecast the policy rate to remain unchanged at 5.25 percent.
“External headwinds have intensified, though the successful completion of trade deals augurs well” for overall economic outlook, said Sanjay Malhotra, governor of Reserve Bank of India, explaining the reason for hitting a pause on the easing cycle.
He added that in the near term, domestic inflation and growth outlook remain positive.
“Guidance was balanced, suggesting a prolonged pause is likely going forward,” said Radhika Rao, senior economist and executive director at DBS Bank Singapore in an emailed response.
The Reserve Bank of India cut benchmark rates by 125 basis points last year, and economists say the focus will now shift to transmission of the previous rate cuts.
Malhotra said the RBI “will remain proactive in liquidity management” and ensure sufficient liquidity in the banking system “to meet the productive requirements of the economy” and to facilitate monetary policy transmission.
“We expect open market operations this quarter and the next,” Rao of DBS Bank said.
Indonesia, Australia strengthen education, economic cooperation
President Prabowo Subianto met with Australian Prime Minister Anthony Albanese at the Merdeka Palace on Friday.
According to a release from Indonesia’s Government Communication Agency (Bakom), the meeting served as momentum to strengthen bilateral relations that have long been supported by cooperation in various sectors, especially in education and the economy.
Citing data from the Australian Government’s Department of Foreign Affairs and Trade on Friday, Indonesia-Australia relations continue to grow. This is reflected in increased student mobility, university cooperation, and a surge in the value of trade between the two countries in recent years.
Educational ties are one of the main pillars of the Indonesia-Australia partnership. In 2025, around 24 thousand Indonesian students were recorded as studying at various Australian universities. In total, more than 200 thousand Indonesians have pursued education in the country.
Indonesia is also one of Australia’s largest sources of international students. The Australian government provides around 220 scholarships and short-term programs each year through the Australia Awards Indonesia scheme.
Several Australian universities have also begun opening campuses and cooperative programs in Indonesia, including Monash University in Jakarta, Western Sydney University in Surabaya, and Deakin University in Bandung.
The presence of these campuses is part of Australia’s commitment to developing Indonesia’s human resources.
Everything to know about poverty: Maldives
The Republic of the Maldives is an archipelago located in South Asia in the northern Indian Ocean. While its population is only approximately 530,000, the Maldives receives almost 2 million tourists per year. Since its first resort opening in the 1970s, the Maldivian economy has grown significantly thanks to its popularity amongst international tourists. However, poverty in the Maldives is an ongoing issue that requires attention.
Over the last decade, there has been a significant decline in poverty in the Maldives. From a 65 percent poverty rate in 2009 to an 11.7 percent poverty rate in 2016, improving quality of life due to flourishing tourism characterized the pre-pandemic Maldivian economy. Its ‘enclave economy’ means that each island has a specific use, for example, some islands are restricted to resorts, while others are strictly for certain industrial activities.
Alongside this, policies like mandating that at least 51 percent of a resort’s workforce must be Maldivian have resulted in a growth of the tertiary sector and an increase in wage employment. Not only have these developments significantly grown government revenue, but they have also improved the quality of life of most Maldivians. This is due to a greater number of households experiencing a stable source of income and growing welfare policies from the government. In fact, the government has strived to redistribute this wealth through infrastructure investment, like airports and public housing.
Despite great economic progress in recent years, the COVID-19 pandemic revealed how fragile the Maldivian economy is; travel bans as a result of the pandemic caused a fall in real GDP by 33.6 percent in 2020, showing how the country’s economy was reliant on international tourism. In fact, resort-based tourism contributes to approximately 23 percent of GDP, meaning that it is at the mercy of factors beyond its control.
Japan Q4 GDP seen returning to growth on robust investment
Japan’s economy is expected to have returned to growth in the final three months of 2025, thanks to vigorous corporate investment and consumption, a Reuters poll showed on Friday.
Gross domestic product (GDP) in real terms likely expanded an annualised 1.6 percent in the fourth quarter, according to the median forecast of 16 economists, after a 2.3 percent drop in July-September, which was the biggest decline in two years.
Without , the October-December growth rate was estimated 0.4 percent.
The estimated return to growth, after a temporary dip, “would confirm that the Japanese economy remains on a gradual recovery path,” wrote Naoki Hattori, chief Japan economist at Mizuho Research & Technologies.
Private consumption, which accounts for more than half of Japan’s GDP, is expected to have grown only 0.1 percent as persistent consumer inflation above the Bank of Japan’s (BOJ) 2 percent target.
Meanwhile, capital expenditure was seen growing 0.8 percent after the previous quarter’s 0.2 percent contraction, supported by rosy business . A BOJ survey in December found big manufacturers’ confidence hit a four-year high.
Net external demand, or exports minus imports, probably added 0.1 percentage points to the fourth-quarter GDP growth, after it shaved 0.2 points in the third quarter, the early blow of U.S. tariffs hit exports.
Reassured by the milder-than-expected tariff impact on the Japanese economy, the BOJ in December raised interest rates 0.75 percent from 0.5 percent and last month upgraded growth and inflation forecasts.
CEO-Veel to launch Nepal pilot to support growing creator economy
Dileep Dhakal, Founder and CEO of Veel, a global platform for video marketing and creator collaborations, has announced plans to launch a pilot project in Nepal.
The announcement was made during a panel discussion at Creator’s Mela, an initiative of the US Embassy in Nepal that brings creators together to explore ideas, collaborate and build skills for the future of Nepal’s creator economy.
The pilot launch aims to support Nepal’s emerging creator ecosystem by enabling brands and creators to connect, collaborate and grow more effectively.
Dhakal was joined by Veronica Camacho, a demand generation specialist and UGC creator from San Francisco, in a session examining the global evolution of the creator economy and its relevance for markets like Nepal.
The discussion highlighted how creators are increasingly becoming entrepreneurs while continuing to face challenges related to monetisation, platform dependency and brand collaboration.
Globally, the creator economy is valued at over $250 billion, driven by short-form video, user-generated content and rising brand investment. In Nepal, the creator economy is estimated at $30–40 million, with creators earning more than $25 million annually, indicating early-stage development but strong growth potential.