Countries in the Middle East and Asia-Pacific are seizing opportunities amid US-led tariff hikes, by diversifying their economies and forging new partnerships. Despite the IMF downgrading global growth forecasts, there’s optimism that strengthening regional ties is helping to build long term resilience – with or without the US.
As finance ministers and central bank governors gathered in Washington D.C. for the IMF and World Bank Spring Meetings this month, the rhetoric appeared noticeably cautious. Global economic instability, compounded by rising tariffs and trade disputes, was the central theme.
“We recognize that there is work under way to resolve trade disputes and reduce uncertainty,” said IMF Managing Director Kristalina Georgieva to reporters. “Uncertainty is really bad for business, so the sooner there is this cloud that is hanging over our heads lifted, the better for profit, for growth, for the world economy.”
Despite hopes for breakthroughs, little concrete progress materialized. The IMF downgraded its global growth forecast for 2025 to 2.8%, down from 3.3% projected in January. The US growth forecast was similarly revised downward to 1.8% from 2.7%, largely due to the adverse effects of escalating trade tensions and tariff impacts.
The US administration’s tariff policies, along with shifting geopolitical stances, have had far-reaching impacts, particularly for the economies of the Global South. Still, amid these stresses, several regions are transforming adversity into opportunity.
While discussions at the Spring Meetings largely centred around risks, Middle Eastern nations are moving assertively to turn global trade disruptions into growth levers. The Gulf Cooperation Council (GCC) countries—especially Bahrain and the UAE—are adapting quickly to shifting trade flows.
The region faces fresh challenges from the White House’s new tariff measures: 10% tariffs on GCC nations, 41% on Syria, 39% on Iraq, and 30% on Algeria, hitting sectors like aluminum, petrochemicals, and tech components hard. Yet instead of retreating, the Middle East is fast-tracking economic diversification and forging new trade partnerships.
Bahrain is pivoting towards agribusiness and food processing—sectors well positioned to benefit from supply chain shifts. The UAE, leveraging its strategic logistics infrastructure, especially at Dubai’s Jebel Ali Port, is reinforcing its status as a global trade hub even amid market volatility.
A critical strategy for the Middle East is deepening economic ties with rising global players like China and India. Saudi Arabia’s Vision 2030 drives a pivot from oil to emerging sectors such as green energy, AI, and digital technology. Abu Dhabi, notably, has expanded green energy collaborations with China.
“The Middle East is increasingly positioning itself as a crucial connector in the global economy,” said Tamer Al-Sayed, CFO at the Future Investment Initiative Institute, highlighting the region’s evolution from traditional consumers to proactive global supply chain players.
The Asia-Pacific region, heavily impacted by rising protectionism, is also carving out new opportunities. As the US-China trade war continues to disrupt global markets, ASEAN nations are stepping up regional cooperation to bolster resilience.
Malaysia, as the 2025 ASEAN Chair, is playing a central role in shaping this effort. Prime Minister Anwar Ibrahim emphasized a “collective approach” to balance national interests with broader ASEAN goals.
ASEAN has strengthened initiatives like the ASEAN Free Trade Area (AFTA) and the ASEAN Trade in Goods Agreement (ATIGA) to reduce non-tariff barriers and enhance intra-regional trade. However, the region hasn’t escaped tariff blows. Recent tariffs imposed by the US hit Vietnam and Cambodia with rates of 46% and 49%, respectively, while Indonesia faced a 32% tariff and Malaysia a 24% one.
In response, Southeast Asian nations are pursuing new trade deals aggressively. Malaysia and Indonesia have secured free trade agreements (FTAs) with the UAE, Thailand is nearing a deal with a Gulf state, and Singapore has signed agreements with Turkey and Mercosur.
Amid US tariff uncertainties, ASEAN is banking on mega-regional trade pacts like the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), both of which notably exclude the US. The ASEAN-China Free Trade Agreement, signed in 2020, continues to reinforce Southeast Asia’s trade strength.
Countries like Vietnam, Malaysia, and Thailand are benefiting from the “China plus one” strategy, where companies diversify manufacturing away from China to Southeast Asia. This has triggered a surge in foreign direct investment (FDI) into the region.
“ASEAN countries could continue to diversify to more non-traditional export markets,” suggested Maria Monica Wihardja, an economist and visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute. She emphasized expansion into the Global South and the European Union to boost trade resilience.
“ASEAN’s strong intra-regional trade and diversified external relationships with China and India are key to weathering the storm,” said Tan See Leng, Singapore’s Minister of State for Trade and Industry.
India, too, is capitalizing on shifting global dynamics. As trade tensions between the US and China persist, India is accelerating its trade engagements, especially with Europe and Latin America. Ongoing FTA negotiations with the UK and the European Union demonstrate India’s intent to expand its global footprint. The country is also enhancing its trade links with Latin America, recognizing the need for diversified partnerships beyond traditional allies.
As Europe faces its own economic shocks from global trade disputes, nations like Germany, Italy, and Spain are deploying “tariff shields”—support packages designed to protect industries from the fallout of rising protectionism.
While global trade tensions and tariff wars present undeniable challenges, they are also sparking strategic adaptation across regions. The Middle East’s economic diversification, ASEAN’s intensified regional cooperation, India’s growing global engagements, and Europe’s protective measures all demonstrate that crisis can drive opportunity.
As Kristalina Georgieva noted, lifting uncertainty is crucial. Until then, strategic cooperation, diversification, and proactive policymaking will remain the essential pathways to global resilience and prosperity.
