China’s economy 2026
China’s economy is facing mounting pressure in 2026 as weak consumer spending, a prolonged property downturn, slowing credit growth, and trade uncertainty threaten to push growth to its lowest target since 1991. While advanced manufacturing and AI exports remain strong, economists warn that structural imbalances could make this one of China’s toughest economic years in decades.
China’s economy, which is the second largest in the world, is heading into 2026 amid increasing pressure, as the result of weakening domestic demand, the lengthy downturn in the property sector, and weakening consumer confidence are putting pressure on economic growth. In contrast to previous instances where economic slowdown was caused by temporary disruptions, economists have come to believe that the present problems are structural in nature, hitting consumers, companies, and local governments. The official growth target for 2026 set by Beijing is at the lowest level since 1991, at 4.5 percent – 5.0 percent. Although China exports goods such as EVs, batteries, semiconductors, and AI products and services, which help drive industrial production, domestic demand continues to lag, as retail sales have declined, property investments are falling, and the debt level of local governments is high.
India cannot outsource
The most important number in the latest U.S. sanctions legislation is not 100 percent. It is 88.7 percent. That is the approximate share of India’s crude-oil requirement met through imports in 2025-26. The figure explains why a possible American tariff on countries buying Russian energy is more than another episode in the India-U.S. trade relationship. It exposes a deeper weakness in India’s economic architecture: a large and growing economy remains heavily dependent on foreign energy while its exporters remain vulnerable to policy changes in a handful of major markets.
The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 authorises tariffs of up to 100 percent on imports from countries purchasing Russian oil or gas under specified circumstances. This does not mean that India automatically faces a 100 percent tariff. The legislation provides for presidential discretion, including adjustments and waivers. But the possibility itself matters because India has become one of the largest buyers of Russian crude since the Ukraine war.
Russian oil’s rise in India’s import basket was driven largely by economics. Western sanctions and the disruption of traditional Russian markets created discounted supplies, while Indian refiners possessed the capacity to process them. Russian crude accounted for about 35 percent of India’s crude imports by value in 2024-25, compared with about 1 percent in 2018-19. More recent shipping estimates have placed the Russian share at around 45 percent.
Maldives’ dollar crisis becomes a political test
The Maldives is in the grip of a severe foreign-exchange crisis centered on a shortage of U.S. dollars. This has been a persistent challenge for the country, especially since it is heavily dependent on imports for basic goods, from food and fuel to medicine and construction materials.
At the heart of the shortage is a debt burden accumulated across successive governments, with $1.7 billion in external debt service falling due in 2026 alone, placing enormous pressure on the foreign-currency reserves needed by the wider economy.
Indonesia’s central bank holds rates steady
Indonesia’s central bank held interest rates steady on Wednesday at its first meeting since Destry Damayanti was appointed governor earlier this month, in line with market expectations, as she highlighted the need to maintain economic growth .
Bank Indonesia kept the benchmark 7-day reverse repurchase rate, opens new tab steady at 5.75 percent, as predicted by 29 of 32 economists polled by Reuters. Its overnight deposit facility rate, opens new tab and lending facility rate, opens new tab were also left unchanged.
“We want to support economic growth because the momentum is there,” Destry said in BI’s first in-person press conference in a year and a half following its monthly policy review.
“While stability remains our focus now, we must also open room for the economy to move faster.”
BI raised rates by 100 basis points in three moves in May and June to defend the rupiah as it fell to record lows against the dollar. These rate hikes were “sufficient” to respond to global uncertainty, she said.
BI kept its economic growth forecast for 2026 at a range of 4.9 percent to 5.7 percent. It recently slightly raised its 2027 growth outlook range to 5.2 percent to 6 percent.
Destry also announced bigger discounts on hedging costs for foreign investors who buy rupiah-denominated assets, in what she called “innovative” policy, in a bid to attract capital inflows and defend the rupiah.
The policy mix remained consistent with BI’s efforts to stabilise the rupiah , maintain inflation within target and support growth, the governor said.
Budget 2027 must turn economic growth
BUDGET 2027 should place greater emphasis on raising Malaysians’ wages and incomes so that economic growth translates into better living standards, Economy Minister Akmal Nasrullah Mohd Nasir said.
He said it was time for the issue of workers’ earnings to become a central part of budget discussions, with the government expected to set out a clearer commitment to improving wage levels.
“It is time for discussions on the income or wages of most Malaysians to be placed as a priority.
“Therefore, it is hoped that in this Budget we will have the ability to state our commitment on how we can review or further improve the position of Malaysian wages,” he told reporters after attending the KL20 Penang 2026 event at the Penang Waterfront Convention Centre in George Town presently.
Akmal was responding to a question on the Economy Ministry’s priorities for Budget 2027, which is scheduled to be tabled on Oct 9.
He said raising incomes must go hand in hand with companies creating more high-skilled jobs and offering better wages.
The government’s approach, he said, also needed to focus on strengthening the economic structure and expanding high-growth, high-value (HGHV) industries.
Japan, India deepen economic and strategic cooperation
Senior Japanese officials outlined the growing scope of Japan-India cooperation during a special briefing on September 22, 2026, focusing on Prime Minister Sanae Takaichi’s visit to the United Nations, New York and the two countries’ strategic partnership.
The briefing was led by Kitamura Toshihiro, press secretary, assistant minister and Director-General for Press and Public Diplomacy, and Ichiba Hiroaki, director of global communications and Deputy Cabinet Secretary for Public Affairs.
“Japan and India, as major democracies and economies, share a responsibility to shape and uphold a free and open international order based on the rule of law,” Toshihiro told South Asian Herald.
He said both countries are committed to advancing concrete cooperation guided by a shared strategic vision under their “Special Strategic and Global Partnership.” This cooperation is reflected in Takaichi’s vision for an evolved “Free and Open Indo-Pacific (FOIP)” and Indian Prime Minister Narendra Modi’s “MAHASAGAR” initiative.
Japan also supports solidarity with the Global South, for which India serves as an important advocate, and remains firmly committed to multilateralism, Toshihiro said.
He added that the leaders of Japan and India have agreed to pursue practical cooperation through the Quad to advance a free and open Indo-Pacific. The two countries are also strengthening coordination across a range of issues affecting the international community.
Against this backdrop, cooperation with India has become indispensable to Japan, both in the broader international community and within the Quad framework, Toshihiro said. He cited the two countries’ shared values and strategic direction as the foundation of the partnership.
Hiroaki emphasized the economic potential of closer cooperation between India, a major emerging market and manufacturing hub, and Japan, which possesses advanced technological capabilities.
He said combining the strengths of the two countries would allow them to generate shared growth and contribute to the sustainable development of the global economy.
Singapore’s record AI boom unlikely to move central bank
Singapore’s electronics exports grew at an unprecedented pace in August as the artificial-intelligence boom shows no signs of waning.
While boosting the city-state’s economy, the surge is unlikely to stoke price pressures and push the central bank toward aggressive tightening, according to analysts.
Data released Thursday showed electronics exports last month rose 132 percent from a year ago. Shipments of personal computers — which include server racks used by data centers — were up 238 percent, while disk drives climbed 214 percent and integrated circuits up 91 percent.
The Singapore dollar outperformed all Asian peers except for the yen on Thursday and was little changed on Friday.
After the trade data, Barclays revised its economic growth forecasts for this year and next by a percentage point each, to 5.5 percent and 4 percent. Still, economist Brian Tan doesn’t see this translating to significant price pressures, pegging core inflation at just 1.7 percent, at the lower half of the central bank’s 2026 forecast range of 1.5 percent to 2.5 percent.
Tan predicts that the Monetary Authority of Singapore (MAS) will “very slightly” tighten anew, but mainly because of the commodities price risks related to the Middle East conflict and the El Nino weather disruptions.
“We view this as a relatively close call, with an elevated risk that the MAS will decide to stay on hold at the upcoming policy meeting” in mid-October, he wrote.
Neighboring Taiwan held its benchmark rate on Thursday as consumer inflation slows even with the economy rocketing on AI.
Singapore’s growth has been unevenly driven by the capital-intensive semiconductor sector, where higher output has been achieved by raising capacity utilization, rather than increasing the workforce, according to Tan. And, he added, firms operating in Singapore are likely to repatriate profits, rather than reward employees with inflation-fueling big payouts, like in South Korea.
Sri Lanka economy grows 4.2pc
Sri Lanka’s economy expanded 4.2 percent in the second quarter of 2026 despite an oil price shock and rising global risks, the International Monetary Fund said Wednesday.
It marked the 11th straight quarter of growth, a testament to the strength of an economy that is still recovering from a financial crisis in 2022. But the IMF said risks remain from the conflict in West Asia, uncertainty about global trade policy and climate-related shocks.
Headline inflation climbed to 8 percent on a year-on-year basis in August, mainly due to higher world oil prices, the IMF said. It warned that continued energy price pressures can weigh on household incomes, business costs and external balances
Sri Lanka’s economy expanded 4.2 percent in the second quarter of 2026 despite an oil price shock and rising global risks, the International Monetary Fund said Wednesday.
It marked the 11th straight quarter of growth, a testament to the strength of an economy that is still recovering from a financial crisis in 2022. But the IMF said risks remain from the conflict in West Asia, uncertainty about global trade policy and climate-related shocks.
Headline inflation climbed to 8 percent on a year-on-year basis in August, mainly due to higher world oil prices, the IMF said. It warned that continued energy price pressures can weigh on household incomes, business costs and external balances.
The Fund said Sri Lanka’s economic reform programme had made it better able to absorb shocks but urged the government to continue with prudent policies and structural reforms.