Asia’s macroeconomic outlook for 2026 remains solid, despite an expected slightly weakening growth-inflation mix. As highlighted in an analysis by Christiaan Tuntono, Senior Economist Asia Pacific at Allianz, the area continues to show robust adaptability in the face of adverse external factors, in particular the tightening of US tariffs. Technology exports remain a key pillar, while scope for future monetary easing further supports the region. Many Asian economies have reached new trade agreements with the United States which, while maintaining high tariffs, have allowed a partial easing of tensions.
China and commercial diplomacy
Beijing stands out for having started a more structured negotiation with Washington, taking advantage of its dominant position in rare earth supplies. The cut in fentanyl duties decided by the USA and the temporary suspension of bilateral sanctions mark a moment of détente. However, the document highlights how new US tariffs will continue to put negative pressure on Asian value chains and foreign demand. In this context, any further rate cuts by the Fed could provide space for Asian central banks to ease monetary conditions.
South Korea: stock market rally and industrial strength
According to Gabriel Debach (eToro), South Korea is one of the most dynamic markets in the world today. 2025 has certified a historic rally: the KOSPI has advanced by 64% since the beginning of the year, the best result since 1999, while the EWY ETF records a +79%. The push comes from two forces: global demand for semiconductors and AI infrastructure, and a reform cycle that addresses the distortions of Korean capitalism. Stocks like SK Hynix (+210%) and Samsung Electronics (+90%) highlight Seoul’s strategic role in the global chip supply chain. The government, according to Debach, is intervening on governance asymmetries, aiming to reduce the historic “Korea discount” and attract foreign capital.
Politics, reforms and the “Korea premium”
Politics has become a real catalyst for South Korean markets. Debach recalls that, despite institutional shocks – from presidential impeachment to US tariffs – investors rewarded Seoul, with inflows of over $780 million into the EWY ETF. President Lee has launched an agenda aimed at KOSPI 5000, based on three pillars: more transparent capital, more rigorous governance and greater openness to international investors. The reforms, combined with industry centrality in semiconductors and AI, are transforming Korea into a market that aspires to “premium status.” A non-linear trajectory but, according to Debach, finally shared by politics, businesses and investors.
