(12 December 2024 – Japan) As we set sail into 2025, Nomura expects turbulence after 2024 turned out to be a goldilocks year for Asian economies despite a weak China.
While strong artificial intelligence (AI) demand and export frontloading should provide some growth support in Q1, Asia appears headed for rougher seas from Q2 due to the fallout from Donald Trump’s second presidency, China’s production overcapacity and a slowing semiconductor cycle. Nomura predicts four forces will determine Asia’s economic outlook in 2025:
- Trumponomics
- China’s stimulus versus overcapacity
- Durability of the semiconductor upcycle
- Buffers from domestic demand
“The ability of Asian central banks to decouple from a more hawkish Fed will vary, depending on their sensitivity to FX, reserve adequacy and other domestic factors. We see diverging monetary policy outlooks across Asia Pacific” commented report contributor Nomura Chief Economist, Japan, Kyohei Morita and Nomura Chief Economist, India and Asia ex-Japan, Sonal Varma.
“More turbulence lies ahead for Asia in 2025. Into the first quarter, strong AI demand and export frontloading may support overall growth, but a sharper sequential moderation is likely from the second quarter due to weaker import demand, slowing semiconductor sales growth and softer domestic demand” stated Nomura Chief China Economist, Ting Lu.
For more on Nomura’s 2025 macroeconomic outlook, read the full report.