- Industrial activity and retail sales data point to a slight slowing of growth in China in 3Q.
- Production related slowdown will keep India in low-6% growth territory.
- Indonesia is likely to maintain a sluggish growth trajectory, in the high-4% area.
- Singapore will likely be flat sequentially, but adverse base effects will push down yoy growth.
- Moderate monetary and fiscal policy support likely from most Asian economies in 3Q.
Related Insights
Commentary: Asia’s 3Q25 growth momentum
After a better-than-expected second quarter, what’s in store for Asia in 3Q? We answer this question with the aid of our GDP Nowcasting analysis for China, India, Indonesia, and Singapore, carried out by gauging the performance of a large number of high frequency, GDP-determining data points available long before the quarter is over. The analysis points toward a degree of waning of growth momentum. In a few cases, this is due to base effects; in other cases, this is due to trade war-related front-loading of exports in 2Q.
China
China's economy grew by 5.2% in 2Q from 5.4% in 1Q, with a sequential gain of 1.1%qoq. As per our Nowcast model, GDP growth would moderate to 4.9% in 3Q. The slowdown is mainly seen in industrial activity and retail sales. Data on fixed assets investment, exports, and loans will show similar rate of growth while non-oil imports will improve slightly during the quarter. We expect 2025 GDP to average 5.0% with additional fiscal stimulus and monetary easing. Trade tensions continue to pose downside risks.
India
Real GDP was up by 7.4%yoy in 1Q, up from 6.4% in 4Q24, taking FY25 GDP to 6.5%. This was led by gross fixed capital formation registering a healthy recovery, while net exports of goods and services remained positive. In contrast, private consumption expenditure slowed while government expenditure contracted. With the aid of our Nowcast model, we estimate growth to moderate to 6.4% in 2Q (1QFY26) and 6.3% in 3Q. As per the model, the slowdown in Q2 growth will mostly be driven by industrial production. Passenger vehicle, two-wheeler and commercial vehicle sales likely contracted at the same pace while credit, service exports, farm tractor sales will continue to rise, albeit at a slower pace during the quarter. We expect full year growth at 6.2% in CY25 from 6.7% in CY24.
Indonesia
Growth will likely moderate to 4.8% in 2Q and 4.7% in 3Q. As per our Nowcast model, the slowdown will be led by weakness in consumer confidence, real credit and government expenditure. Prompt manufacturing index, motor vehicle and motorcycle sales also likely deteriorated while visitor arrivals, non-oil imports and cement consumption are set to improve. We expect GDP to register a growth rate of 4.8% in 2025 from 5.0% in 2024.
Singapore
Advance real GDP rose by 1.4% on a quarter-on-quarter, seasonally adjusted, basis in 2Q, reversing the 0.5% contraction in 1Q. It escaped a technical recession mainly due to exports front-loading. This translated to economic growth of 4.3%yoy in 2Q, compared to an upwardly revised 4.1%yoy in 1Q. As per our Nowcast model, growth would moderate to 0.5%yoy in 3Q. This will be driven by an adverse base effect from a growth spike in 3Q last year, weaker re-exports, industrial production, real credit, retail sales, and hotel occupancy. We foresee softer GDP growth in 2H25, due to high trade frictions and weaker business sentiment, with our full year growth forecast at 2.0% in 2025 from 4.4% in 2024.
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