Abstract: This study traces the transformation of China over the years. It examines the country’s high debt position which is in all sectors including central government, local governments, corporates and private households which according to the IMF totals 80 percent of GDP. Local debt conditions continue to deteriorate for different reasons – particularly as a consequence of the ongoing real estate crisis but also due to the weakening economic growth potential. The author also highlights the role of BRICS II as an organisation ready for increasing Chinese influence. The study concludes China’s real estate crisis may be much more serious than usually understood by most Western analysts.
It is not a new analytical conclusion that the absurd tariffs of President Trump also damage emerging markets though with different intensity from country to country. This harming American policy certainly also affects Asian countries which recently has been confirmed by the updated forecast of the Asian Development Bank (ADB). The weakening outlook for the Asian member countries of the ADB also means a limited setback for Western corporations in their attempt to diversify their export markets as a reaction on the deteriorating conditions on U.S. markets. However, Asian growth performance will remain superior to the rest of the world.
Negative growth effects from tariffs but partly offset by domestic policy
ADB summarizes its revised forecast from September 2025 as follows: “Developing Asia’s growth forecasts are trimmed to 4.8% in 2025 and 4.5% in 2026, down by 0.1 and 0.2 percentage points from April. The revisions reflect offsetting factors. The updated trade agreements and tariffs led to a broad shift toward higher US tariffs, which will weigh on the region’s exports and growth. However, fiscal and monetary policy responses are expected to cushion the impact…” (see https://www.adb.org/outlook/editions/september-2025).
It also should be observed that China still has not achieved a deal with the Trump administration. This means a major shortcoming or uncertainty in the ADB forecast -despite the fact that many Asian countries indeed have a trade agreement with the U.S. since August 1. But who knows which trade deal can be regarded as stable?
As far as China is concerned, the ADB explains that GDP forecasts for the People’s Republic of China (PRC) have been kept unchanged due to domestic growth support. At the same time, the ADB still mentions concerns about China’s “continued weakness in the property market”. My own interpretation of the ADB view on the PRC means continuing concerns, reflected by the decelerating GDP-growth forecasts for 2025 and 2026 (4.7 and 4.3 percent).
India has to accept some downward revision of its growth as well but remains the fastest (major) economy in Asia (expected GDP growth: 6.5 percent in both 2025 and 2026).
Unfortunately, South East Asia will have to face the most negative growth impact in 2026 from Trump’s trade restrictions. Indonesia (GDP +5.0 in the September forecast for 2026, down from +5.1 percent in April)is still considered to remain on track – but countries such as the Philippines (to +5.7 from +6.1 percent), Thailand (to +1.6 from +2.9 percent), Vietnam (to +6.0 from +6.5 percent) and Malaysia (to +4.2 from 4.8 percent) lose quite some momentum – mainly due to American tariffs.
Conclusion: American protectionism certainly affects Asia negatively as a whole – but certain countries more than others. However, altogether Asia will most probably remain the fastest growing region or continent also in the future – as a message to the corporate sector, at least as long as China can avoid a (financial) meltdown.
Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
Russia is causing these days – for well-known reasons – almost no headlines or analysis on its pure economic development in Western analysis. An exemption is the important work done by BOFIT in Helsinki which is an organization that still provides the world with updated analysis on the Russian economy.
Anyway, the Russian economy looks very much like stagnating these days, reflecting a deterioration from previous more positive growth numbers (Q2:+1.1%; Q1:1.4% yoy, but down by 0,6% in the course of the first half of 2025 according to Reuters and the CBR).
Interestingly, existing sluggish economic growth is mainly referred to still existing high interest rates as the main medicine against very high inflation and their negative impact on non-military investment. Poor economic results for many Russian companies also had – and probably still have – a negative impact on investment plans. On the other hand, government spending continues to grow and will do so in the future.
Altogether, the non-military part of the Russian economy has more recently – according to BOFIT – mainly been driven by private consumption. This is obviously confirmed by statistical numbers for retail sales and services – a development that is to some extent supported by relatively low unemployment.
Measured from the production side it can be summarized that industrial production remains more or less stagnating with rising production of commodities and shrinking output of quite some manufacturing goods – but with positive numbers for certain manufactured products such as transport and electronic equipment.
Summary: When studying forecasts on the Russian GDP, stagnation or in the best case only a very weak increase seems to be on the cards for 2025, indicating some further weakening in the forthcoming quarters and probably no visibly improved performance next year. But uncertainty – also statistical? – remains high in 2026.
Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
