Market Review and Outlook Economy
Of course, not all economies are being equally impacted. At the headline level, those economies that have strong domestic consumption or have limited trade exposure to the U.S. are forecast to lead the region. In contrast, those with weaker consumption and more trade exposure are expected to experience comparatively slower growth. Despite macroeconomic uncertainty, businesses became considerably more optimistic as they successfully navigated changing market conditions and have now started to reinvest in their growth strategies. No doubt, the exceptional growth of the AI sector has been a key component of this renewed confidence. Furthermore, selective interest rate cuts will bring down the cost of debt and provide additional support for growth.
The regional economy has shown considerable resilience through what had been a volatile year. Growth in H1 2025 largely exceeded expectations, although the underlying drivers have been “choppy.” The imposition of U.S. tariffs has had global ramifications, felt more acutely in Asia Pacific given the breadth and depth of trade ties. Accordingly, the changing tariff environment has resulted in surges and pull- backs in demand as exporters have rushed to fill orders before tariff hikes have taken effect. Such activity has supported economic growth through 2025, with revised regional GDP estimated at 4.3%. Amidst this, inflation remains in the spotlight but for differing reasons. On the one hand, price growth remains anaemic on the Chinese mainland and in Thailand; on the other, a recent surge in Australia has ignited concerns of re-inflationary pressures. Between these extremes, inflation remains weaker than many central banks would like, reflecting subdued domestic consumption. As a result, most central banks continue to maintain an accommodative bias while the Bank of Japan— and now the Reserve Bank of Australia—have hiked rates. In late February, the tariff landscape shifted once again and escalation of conflict in the Middle East has further clouded the growth outlook. Prior to these events, growth had been expected to slow through H1 2026 before improving in the second half of the year, resulting in average annual growth of 3.7%. Although not part of the baseline scenario, any early reduction in tariffs is an upside risk for the region that could help drive stronger growth.
WPP, SINGAPORE
Figure 1: Real GDP growth (% average annual) for select markets in 2025 and 2026
2025
2026
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%
Source: Moody’s Analytics; Cushman & Wakefield
SIMCORP, PHILIPPINES
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5
Cushman & Wakefield
APAC Office Fit Out Cost Guide 2026
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