Asia’s growth lead widens development gap across emerging economies

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Asia’s widening growth gap

Highlights

Eight Asian economies' average output per person is projected to reach about twice that of other developing economies by 2026, according to UNCTAD.
Asia is expected to represent 59% of global growth in 2026, with India, Indonesia and China forecast to expand 7.3%, 5.2% and 4.5% respectively.
Asia attracted $561 billion in greenfield foreign investment in strategic sectors between 2020 and 2025, about three quarters of developing-economy inflows, far outpacing Latin America and Africa.

UNCTAD report highlights diverging growth paths

As reported by UNCTAD, citing UN Trade and Development, its Trade and Development Report 2026 shows that a selection of eight Asian economies has moved from having average output per person below that of other developing economies in the early 1990s to a projected level roughly twice as high by 2026.

The group includes China, India, Indonesia, Malaysia, Singapore, Viet Nam, Hong Kong SAR (China) and Taiwan Province of China. Their average output per person rises from about 4% of the developed-economy average in the early 1990s to a projected 18% in 2026, while the remaining developing economies start at about 10% and edge down to about 9%.

Asia is expected to account for 59% of global growth in 2026. India’s economy is projected to expand by 7.3%, Indonesia’s by 5.2% and China’s by 4.5%, while global growth is forecast to slow to 2.6% from 2.9% in 2025 and growth across developing economies is set to fall to 4% from 4.7%.

Strategic sector barriers reshape development model

The report says industrialization and exports have been central to Asia’s catch-up, but traditional manufacturing in areas such as textiles and consumer goods no longer offers the same scope for development. Even during 2003 to 2013, when both Asian frontrunners and other developing economies were narrowing the gap with developed markets, the Asian group advanced almost four times faster, and their paths have diverged further since the mid-2010s.

Investment is increasingly shifting toward sectors that require advanced technology, large-scale finance and specialized skills. In 2025, semiconductors, AI infrastructure and clean energy technologies account for 44% of the value of announced greenfield foreign investment, up from 16% in 2020.

UNCTAD says growing use of export controls, investment screening and technology restrictions is making it harder for latecomer economies to enter and move up value chains. Europe and North America attract more than half of announced inward investment in strategic sectors between 2020 and 2025, while developing economies receive the larger share only in critical minerals and strategic materials.

Within the global South, Asia captures most greenfield foreign investment in strategic sectors, drawing $561 billion between 2020 and 2025, compared with $126 billion for Latin America and $71 billion for Africa. Roughly three quarters of the developing-economy total goes to Asia, underscoring how access to capital and technology is becoming more concentrated.

Our earlier coverage of China’s third-quarter growth outlook examined expectations for a modest pickup supported by fresh policy measures, including targeted rate cuts, mortgage subsidies and the use of additional government debt quotas. It also highlighted how stronger exports and factory output were offsetting weak domestic demand and ongoing property-sector stress, keeping growth near the lower end of Beijing’s annual target range.

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