Asia Edge: IMF handshakes and inflation flares

This report is J.P. Morgan's Asia Edge weekly overview of key economic and market-relevant developments in Asia Edge economies. Pakistan reached a staff-level agreement (SLA) with the IMF on October 7 on the fourth review of the 2024-2027 Extended Fund Facility (EFF) arrangement; IMF Board approval would unlock about US$1.21bn, with our baseline assuming approval by end-2026. The IMF confirmed the primary surplus target of 2% of GDP for FY2026/27 but called for the prompt phasing out of the recently introduced fuel subsidy scheme, which may prove contentious. Sri Lanka reached an SLA on October 4 on the seventh and penultimate review of its 2023-2027 program, with Board approval (unlocking US$345mn) conditional on a 2027 Budget aligned with program targets. Vietnam's GDP expanded 9.95%oya in 3Q26, lifting growth over the first three quarters to 9%;