Asia Pacific News
LAST UPDATE: July 25, 2025
IMF’s Fifth Review of Sri Lanka Set for Fall 2025; Program Could See Revisions
Sri Lanka’s IMF‑supported Extended Fund Facility (EFF) enters its fifth review during fall 2025 (September–November), as confirmed by IMF communications director Julie Kozack. The review will assess macroeconomic conditions, reform progress, and external risks, with possible revisions to the program. The IMF will also evaluate global trade tensions’ impact.
Insight
The IMF recognises Sri Lanka’s reform gains but remains cautious amid rising global trade policy uncertainty. As trade tensions grow, the Fund may adjust program targets or timelines. The upcoming review will balance internal reforms with external vulnerabilities.
IMF says any Japan stimulus should be temporary, targeted
The IMF advised Japan’s new government to pair any fiscal stimulus with a clear near‑term fiscal consolidation plan. Stimulus measures should be limited, aimed at vulnerable households and firms, and temporary in nature.
Insight
Rather than blanket spending, the IMF favors precision support in Japan—targeted relief now, with a roadmap toward fiscal tightening. It signals concern over sustainability and inflation alignment.
India’s Modi and UK PM Starmer ink trade deal
Indian Prime Minister Narendra Modi and UK Prime Minister Keir Starmer formally signed a landmark Free Trade Agreement, the most significant since Brexit. The deal reduces tariffs on key goods like whisky, cars, textiles, and food, and aims to boost bilateral trade by ~£25.5 billion yearly.
Insight
This historic pact reinforces India‑UK strategic ties and delivers meaningful economic gains. The depth of tariff reductions and sectoral access highlights a shift toward multilateral trade diversification beyond EU frameworks.
India’s Goyal hopeful of concluding US trade deal after ‘fantastic’ progress
Commerce Minister Piyush Goyal described trade negotiations with the US as making “fantastic” progress. Despite sticking points—especially on agriculture and dairy—he expressed optimism for reaching a preferential or sectoral agreement before the August 1 tariff reprieve deadline.
Insight
Goyal’s tone suggests India may pursue phased or partial deals rather than full comprehensive agreement. Strategic use of “first mover” status underlines India’s demand for preferential treatment, even amid US tariff pressures.
India resists EU’s oversight proposal on capital flows citing sovereignty concerns, sources say
In ongoing India‑EU free-trade talks, India pushed back against an EU proposal that would grant the 27-nation bloc authority to impose temporary restrictions on capital flows. India argues this undermines its sovereign crisis management and deviates from FTAs the EU signed with Vietnam, Singapore, and South Korea.
Insight
Sovereignty remains a core concern for India in deep trade deals. By highlighting EU’s own precedent, India seeks parity and warns against asymmetric safeguards. The dispute could complicate final EU‑India agreement.
South Korea’s Finance Ministry May Lose Budget Power in Reform
As part of planned reforms by President Lee Jae‑myung’s administration, South Korea’s Ministry of Economy and Finance could lose its authority to draft the national budget, transferring responsibility elsewhere. Critics warn this may raise the risk of economic populism.
Insight
The shift signifies structural realignment in budget governance. Removing technocratic control may increase political discretion, amplifying populist fiscal pressures unless offset by new oversight mechanisms.
Thai June exports rise 15.5% y/y, below forecast
Thailand’s customs‑cleared exports in June grew 15.5% year‑on‑year, missing forecasts of ~18.7% and slowing from 18.4% in May.
Insight
Despite solid growth, the export deceleration signals waning external demand and potential export-driven slowdown risks. It may prompt policy attention toward export incentives or trade diversification.
Malaysia targeting lowest possible tariff rate in US talks, trade minister says
Malaysia is negotiating with the US to avoid a proposed 25% tariff on its exports. The trade minister stressed the goal is to achieve a tariff rate lower than 20%, rejecting reports that 20% is sufficient. Talks aim to meet an August 1 deadline.
Insight
Malaysia is positioning itself aggressively in US trade negotiations, rejecting regional peer-level deals. The firm stance on sovereignty and industrial protections shows balancing between liberalization and domestic interests.
