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Business Daily
Can Asia’s economic growth hold up in 2026?
00:17:29
We speak to our business correspondents in Singapore and Delhi to discuss the year ahead
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- [00:00]
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- [01:20]
Will Bain
Hello and welcome to Business Daily on the BBC World Service. I'm Will Bain. Asia is home to many of the fastest growing economies and companies in the world, with the pace of change on the business landscape as a result shifting like nowhere else on the planet. So today in the latest of our look ahead to what 2026 might have in store for our companies and economies, we're looking at the challenges and opportunities across Asia. Alibaba, Huawei, Samsung, Deepseek, Softbank, Sony, Tata. The list goes on. Many of the world's biggest companies and the fastest growing ones too, call Asia home. And after a year of geopolitical shocks through 2025, driven by massive trade uncertainties, in particular because of tariffs, of course, where do the big players, both companies and countries, sit as we enter 2026 and have Asian economies ridden out that storm? To look at that and much more, we're joined from Singapore by our Asia business correspondent, Suranjana Tiwari, and from Delhi by the BBC's India business correspondent, Arunjay Mukherjee. If there was one word, we were joking about this in the first one of these of our look back and look ahead and it seems almost impossible to look ahead to 26 without looking back. Then if there was one word that dominated all our coverage on our business programs, it was tariffs. Give us the sweep with your role kind of covering the entire kind of region. Where are we at the end of this kind of bonkers year, even by recent standards, when it's come to tariffs?
- [02:49]
Suranjana Tiwari
Yeah, it's really the stuff of nightmares for people like you and me, Will, who cover tariffs and trade wars every day. You know, there was phases in the last year where I was waking up and it was like another tariff, another sector that's being tariff. How is that going to impact the economies and the companies that I cover? And the thing about the Asia Pacific is the world's entire supply chains run through here. So much manufacturing for things that we use every day, smartphones, semiconductors, computers, the clothing that we use. So you can imagine Trump's Liberation Day tariffs and all the tariffs that came after that that have really caused some shock and really shaken up this region. Having said that, looking forward, I will say the response has been really tremendous. I mean, these are emerging economies, they're smaller economies. They don't have as many resources as developed economies within this region or throughout the rest of the world to be able to respond to those types of trade tensions and tariff wars. And yet they've come together. They found new markets in the Middle east, in Latin America and in Europe as well. And at the same time, they have sent negotiating teams to Washington, D.C. they have negotiated trade deals, and most of them have managed to negotiate fairly competitive tariffs. And all at the same time, China has been standing by saying, hey, here we're a reliable trading partner, far more reliable as the US and so it's been a real diplomatic balancing act for these countries as well.
- [04:26]
Will Bain
Running. They give us a picture from the economies you cover as well at the end of the year, because initially it's. It looked like, didn't it, India in particular were perhaps not going to be the worst hit. And then as the year went on, all of that seems to have changed in the relationship with President Trump. You're laughing already. You've covered a lot of the ins and outs of this.
- [04:45]
Arunjay Mukherjee
Absolutely, Will. And I'm laughing because I think, you know, in the beginning of the year, when all of this was happening, the general sense among US Reporters in India was that the ability for India to manage to negotiate a deal with the US Was perhaps going to be very, well, not easy, but at least possible. And a lot of people were putting a lot of emphasis on the fact that you've got two leaders who really get along Prime Minister Narendra Modi and President Donald Trump of the US the stage, in a sense, was set that, look, this is bound to happen. It is definitely going to happen. And look where we are at the end of the year. Well, you've got India looking at 50% tariffs. I mean, you had the 25% and then that additional 25% really came as that nail in the coffin, which I think India was not really expecting. It really highlights the nature of the conversations, how complex this relationship is, despite all the optics, despite all the smiles and words that have been exchanged by the two leaders and the negotiating teams. And I think at the heart of it, the fact that India and the US have not managed to nail it down suggests how difficult this is going to be. India still very fiercely protective of a lot of areas which they are very concerned about opening access to, like the agriculture sector, the dairy sector. They're very concerned what that might mean for, for instance, India's farmers, labour intensive sectors like textiles, gems, jewelry. You know, that's something that is likely also be impacted. And I think there is a worry that short term impacts to long term impacts of them not being able to sort of hammer out something is really going to be felt in 2026.
- [06:13]
Will Bain
Does that mean then, similar to what sir and Jana was saying about a lot of those economies in East Asia, that there's two tacks here. One, negotiating your position, obviously with the United States, but two, actually being more aggressive than ever in seeking out new partners, new deals, new relationships.
- [06:31]
Arunjay Mukherjee
Absolutely. And we've seen a bit of that happen as well. You know, I think the opt really matter over here. When the conversations with India were going south, when Donald Trump was talking about 50% tariffs, you had India having conversations with countries like Brazil, you had Indian officials visiting Moscow, you had Prime Minister Narendra Modi in a photograph sharing space with Vladimir Putin, Xi Jinping at the SEO. So I think the message from India was also loud and clear that, look, this is not working out, but India does have options. And I think we're going to see a lot more of this balancing act play out as India looks to figure out where exactly it would like to focus.
- [07:05]
Will Bain
And that's a lot of talking about goods trade, but people are sort of an adjacent part of all of this as well. And I'm just looking at a chart here on our BBC website of five countries with the most H1B visa approval. So this is something that President Trump has been doing alongside his tariff war, changing the specialist visa rules in the United States. As well, making companies in the United States pay up to $100,000 to apply for just one visa for one employee on some of these things. And looking at this, lister in China, four of the five in the region that you guys cover, India, China, the Philippines, South Korea as well, how much of that? Perhaps not talked about as much as the tariffs, but something that's going to spill into 2026 as well.
- [07:47]
Suranjana Tiwari
Yeah, I think we're going to see more of that anti immigration, anti foreign worker across the socioeconomic board as well. By the way, in this region, there are many countries that have aging societies and very low birth rates. Countries like Japan and South Korea, they actually need foreign workers coming in from the likes of the Philippines, coming in from Indonesia, coming in from Myanmar in order to support the economy. But because of the geopolitical situation, because of the general mood in the world, some countries, including Japan, are very anti immigration. I think the US has really rattled people in this region and the steps it's taken with regards to H1B visas and immigration in general. And students especially, they don't know where they're going to study because although this region has really expanded in terms of manufacturing and blue collar jobs, these students, these young people, they're still going abroad in order to get that technical, that specialist knowledge, especially in things like science and in technology.
- [08:52]
Arunjay Mukherjee
H1B has been a huge concern for Indians, especially given the fact a massive chunk of H1B visas goes to India. And I think the IT sector is one example. You've got all those young software engineers who are working on the west coast and Silicon Valley who are working for these big companies who are all impacted. And you would remember when those new rules came in from the US there was this big fear. You had people wondering whether they'll be able to go back to the US People lining up at airports, trying to fly back and rush back to the U.S. i think that really illustrates the fear that remains when it comes to the aspect of H1B. We've done a couple of stories on that here as well. And there is a genuine fear about H1B visas and possibilities abroad. But having said that, I think, you know, another point would be whether India can actually convert that into some sort of an opportunity. Because there's always been a concern about the talent pool in India going abroad. It's been aspirational for young Indians. And so I think given that, perhaps can India turn that into an opportunity to have some more incentives here in India in terms of businesses in, for instance, the AI space?
- [09:50]
Will Bain
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- [10:25]
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- [11:44]
Will Bain
I'm Will Bain and today we're looking at what 2026 might hold for economies and companies across Asia. With our Asia business correspondent Suranjana Tiwari and our India business correspondent Arunde Mukherjee. Expand on that for us because it'll lead us neatly into as well the challenge that Asian companies are throwing down in the tech space. Whether we're talking chips or AI itself, but just on India specifically as well. Aruna Day. I mean most of the leaders of the biggest companies in the world, American listed companies, are Indian tech leaders, aren't they? These are people who have helped lead these companies to shape this space. There is, as you say presumably now question marks say okay, well if you don't want our talent, perhaps we can do something with it.
- [12:25]
Arunjay Mukherjee
At home you had Satya Nadella just here in India this week where he was speaking to Prime Minister Narendra Modi making that big announcement for Microsoft's investment in AI. You've got Goog Google doing the same earlier this year. You've got Amazon making another announcement. As far as investments in India are concerned, there is also a realization by these big tech companies the fact that they're also looking at India as this growing economy. And the biggest advantage that India has definitely sort of marketed in a way is that 1.4 billion population which cannot be ignored. And I think that's what a lot of these big tech companies are looking to target and tap into. They look at what kind of fertile options and fertile market really exists. And I think that's where it would be very interesting to see how they managed to develop the air space, a space in which India has not really managed to make any major gains, but has significantly lagged behind compared to other countries like China or even the U.S.
- [13:13]
Will Bain
Sorrentiana, sitting from the distance that I am to everything that's going on there, that feels to me a story going on into next year as well. Asia, really throwing down the challenge here to lead the world, as you guys have both said, in AI, but in a whole number of other spaces, right? Whether it be electric cars or solar panels.
- [13:32]
Suranjana Tiwari
Absolutely tremendous enthusiasm about the growth that Asia is going to see in the coming, coming year and coming years. And AI is a big part of that. And there's a few reasons for that. Firstly, all that investment, all those chips, all those large language models, remember those chips once again are made in this part of the world. The data centers are being built over here. The infrastructure, the cloud is happening here. And that's why we're seeing a huge amount of investment. Governments pivot their own investment. So it's not just private investment, it's also public investment as well. And so everyone is trying to ride this AI boom. Now, obviously in the US there have been concerns about a bubble. At the end of the day, the technology is being developed in the us but it feels like the infrastructure is being developed here in Asia. And that's what people are investing in. And it's different from the dot com boom in that you do need some form of bricks and mortar in terms of data centers. You know, countries like Malaysia have really pitched themselves as places where data centers can be built. Japan also says it has everything. It has the water that's required, it has the land. Build your data centers here. So a lot of people, a lot of companies, a lot of Countries are trying to jump on that AI bandwagon and it doesn't feel as bubbly as it does over in the US Certainly from where I'm standing, just a sort.
- [14:57]
Will Bain
Of anecdotal one, perhaps for both of you. Arunde first and then Suranjana. When we chatted with Darshini and Michelle, looking at the kind of global economy and the big overview, we spent a lot of time obviously talking about Western economies and this growth picture and basically being stuck in the mud and this feeling that nothing works and that they're drowning in government debt. Just interested hearing you talk, Suranjana, about what you've seen as you go around the region, can you feel it changing? Does it feel like it's changing quickly around you?
- [15:22]
Suranjana Tiwari
I think Asia is in a very different situation. Very frankly. I see a lot of growth. There are constraints. China's still in the economic slowdown. The property sector is still weighing on it. But elsewhere, there's a lot of optimism about growth going forward, partly because of these types of, of AI investments, but also because all the technology and it feels like a lot of the manufacturing is coming out of here. There's huge growth drivers. Now, having said that, there are major challenges I mentioned earlier, aging populations, low birth rates, unemployment is still a big problem in emerging economies. Countries like the Philippines, for example, like India, they have not really been able to commit to investing in AI and really preparing for the future. And having said that, there's still a lot of potential in the region. And, you know, I was just at a briefing with one of the big financial houses and they are very optimistic about growth in Asia. And actually India in particular, India remains.
- [16:18]
Arunjay Mukherjee
One of the fastest growing global economies in the world. The kind of figures that India has put out as far as its GDP is concerned have been fairly robust. Even the last quarter that we saw coming up at over 8%, essentially showing resilience, rural consumption as well, you know, in India's rural parts, massive part of India's economy. We saw a boost in spending as well. But I think all of those factors and indicators certainly putting out a positive picture. And I think all the focus will be in the second month of 2026 come February when the Indian government presents its big budget, which is its annual spending plan for the country. How it assesses the situation, what kind of shock absorbers it really puts in to try and tackle some of those global headwinds India would be anticipating.
- [16:58]
Will Bain
Got a couple of challenges for the pair of you now as well. This is the hardest bit of all of These because producer Matt's quick fire questions here. We were laughing in our first one about predictions that went awry for the global economy. So what's your sense as to what we will be talking about if we do this exercise together this time next year? Suranjana, what do you think is going to be the theme, the main topic?
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Suranjana Tiwari
Well, I think we've already discussed it. I think we're still going to be talking about trade and tariffs, especially if President Trump makes it to China in April. I think that will really change the needle on the relationship between the US And China. I think we'll still be talking about AI, maybe more about how AI gets more and more integrated into, into our daily lives.
- [17:38]
Arunjay Mukherjee
Given that, you know, we've been sort of left in this suspense about India, US Trade ties, I wouldn't be surprised if that suspense carries on till next December. I'm sure the officials will be hoping it doesn't. I think the other aspect which, you know, we delved into a little bit in our coverage is India, Russia and purchase of Russian oil, which has been a very, very significant aspect of India's imports, something that's irritated Donald Trump a lot given that the accusation is that India buying more oil is fueling Kremlin's war chest in Ukraine. So there are aspects as well which have resonance here in the country. And I think AI is going to be a big factor in terms of how India manages to get itself out of this slumber, if I may call it, when it has come to AI, whether it actually manages to turn itself around given these kind of big ticket investments the likes of Amazon, Google and Microsoft have announced.
- [18:26]
Will Bain
And as a final thought then, because you guys are both out and about so much as well, you've got a hunch of something. Maybe it's a product, a person, a company that perhaps has been in the news or but we're going to hear a lot more about. Is there a sense of something that you think is kind of being underreported at the moment? That might be kind of one of the stories of next year that you'll.
- [18:43]
Suranjana Tiwari
Be covering a lot autonomous vehicles. I think we're finally going to see them being deployed on roads. I am still very fearful of the idea of them being deployed in an Indonesia or in India even. But I do think that China is going to get there very soon, maybe this year. They're here as well. They're in Singapore, but, you know, the traffic is much more orderly here. I think there's a lot more to come on that story, even when they are deployed fully on China or Singapore's roads.
- [19:12]
Arunjay Mukherjee
And well, if I could come in, I think one area that I would be keen to watch out for and we could see more movement in that is the EV space, the electric vehicle space and how India really adapts to that. It's something again that India is not able to really capitalize on, but it's slowly trying to make its way. You had like the likes of Tesla making an entry in the country. You have a lot of companies boosting up sales when it comes to electric vehicles. And I think all of this ties into a big, big problem, especially that North India has been really struggling with, is air pollution, you know, the worst in the world, which has definitely had a lot of long term economic impacts as well. And I think there is a realization that this is a problem which I think needs to be addressed. And I think I would say that this is one space I think will be talked about a lot going forward. That's a sense that I'm getting our.
- [19:53]
Will Bain
Asia business correspondent, Suranjana Tiwari and our India business correspondent, Aruna Day Mukherjee there. And tomorrow you're going to hear from our technology editor, Zoe Kleiman and Lily Jamal, our Silicon Valley based North America technology correspondent, on one of the fastest moving areas of global business, the battle for AI supremacy, chip wars and the year ahead for global tech. So do join us for that or even better, subscribe to our podcast. To never miss an episode, just search for BBC Business Daily.
- [20:41]
Suranjana Tiwari
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- [20:43]
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Suranjana Tiwari
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Suranjana Tiwari
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- [21:00]
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- [21:06]
Suranjana Tiwari
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