The International Monetary Fund (IMF) has called on Asian economies to strengthen regional trade integration and lower non-tariff barriers to safeguard against U.S. tariffs and global financial instability. In its latest regional economic outlook, the IMF emphasized that Asia’s heavy reliance on global supply chains, with China at the center of production, leaves it vulnerable to disruptions from ongoing U.S.-China trade tensions.
According to Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, increased intra-regional trade could serve as a crucial buffer against external shocks. Currently, about 60% of Asia’s exports are intermediate goods traded within the region, while only 30% of final goods are sold regionally—highlighting Asia’s dependence on U.S. and European markets.
The IMF report noted that trade frictions and the surge in artificial intelligence investments have already stimulated intra-Asian trade. Further regional integration and reduced trade barriers could help diversify export markets, cut costs, and mitigate the negative impact of tariff increases. The report also urged Asian economies to pursue broader, multilateral trade agreements similar to those in the European Union to replace overlapping bilateral pacts and inconsistent trade standards.
Non-tariff barriers—many of which rose during the COVID-19 pandemic—remain widespread across Asia. Reducing these barriers could yield significant economic benefits, the IMF said. Some nations are already taking voluntary steps to eliminate such restrictions as part of trade discussions with the U.S., a move the IMF described as “very positive.”
Enhanced regional trade integration could lift Asia’s GDP by up to 1.4% and ASEAN economies by as much as 4% over the medium term. The IMF forecasts Asia’s economy to grow 4.5% in 2025 before easing to 4.1% in 2026 amid continued trade tensions, weaker Chinese demand, and softer private consumption.