Asia is anticipated to drive the return of emerging markets, even as China’s economy slows, according to a French asset management firm.
With geopolitics and policy shifts creating “a more fragmented world”, new opportunities are likely to emerge in the global reordering as companies adapt by forming new partnerships and relocating their operations, Amundi said.
In its 2025 Global Investment Outlook, Amundi highlighted emerging Asian economies as having demonstrated “robust growth”, driven by regional integration and dominance in the technology supply chain.
Commenting on global growth trends, Monica Defend, head of Amundi Investment Institute, predicted softer growth overall. But while the US economy is set to moderate and Europe is positioned for a modest recovery, emerging markets are expected to maintain a growth premium over developed economies.
“We forecast global growth to soften at 3.0 per cent in 2025 and 2026. The growth differential between emerging and developed markets should also stabilise, with EM growing +3.9 per cent and DM +1.6 per cent over the next two years,” she said.
“We expect the US economy to mildly decelerate towards a soft landing, Europe’s recovery towards potential growth to be modest and progressive, and Asia to remain a major driver of growth, despite China’s slowdown.”
Namely, Amundi explained that emerging Asia is expected to continue to benefit from increasing regional integration and resilience, while it continues to shift towards “more strategic goals”.
The two standouts in Asia are India and Indonesia, with both countries described as “the most insulated” from the impact of President-elect Donald Trump’s policies.
“India and Indonesia are positioned as long-term beneficiaries, while we expect continuous re-routing and policy support to stabilise the Chinese economy and mitigate the possible negative impact from tariffs,” the report said.
Amundi’s outlook projects that resilient economic growth will continue in India, normalising to approximately 6.5 per cent in 2026, driven by a combination of domestic demand and investments.
Separately, Federated Hermes emphasised India’s strategic partnership with the US in the Indo-Pacific region, countering China’s growing influence.
It is expected that under Trump, India and the US will continue to strengthen their defence ties and, given that India’ economy is “largely domestically driven”, the impacts from potential US tariffs is expected to be relatively “muted”.
“Depending on Trump’s administration’s focus, there could be opportunities for increased economic collaboration in sectors like technology, pharmaceuticals, and manufacturing. India’s response to the various developments would also play a crucial role in shaping the future of US-India relations,” the firm said.
On the other hand, China, the second biggest economy, is expected to bear the brunt of Trump-era trade policies, although many expect that tariffs remain below the promised 60 per cent on all Chinese goods.
Despite this, Amundi predicts that China still has “room to react”, including via potential new stimulus measures.
Earlier this month, China announced a US$1.4 trillion local debt package, leaving markets disappointed due to the absence of direct stimulus.
According to Amundi, 2025 will mark “China’s new normal”, requiring structural reforms and policy support to counter its economic slowdown.
