ADB Trims Southeast Asia 2025 Forecast On Trade Risks
KUALA LUMPUR, July 23 (Bernama) -- The Asian Development Bank (ADB) has revised down its economic growth forecasts for Southeast Asia for 2025 and 2026, citing a continued global slowdown and heightened trade uncertainty.
The downgrade is consistent with the ADB’s latest outlook for Developing Asia, with growth now projected at 4.7 per cent in 2025 and 4.6 per cent in 2026, down from April estimates of 4.9 per cent and 4.7 per cent, respectively.
In its July 2025 Asian Development Outlook (ADO), ADB said growth in Southeast Asia picked up in the first quarter of 2025, buoyed by strong domestic demand and front-loaded exports ahead of impending tariffs.
However, rising tariffs and global trade tensions are expected to weigh on momentum in the coming quarters.
The growth forecast for Southeast Asia has been lowered to 4.2 per cent in 2025 and 4.3 per cent in 2026, from earlier projections of 4.7 per cent for both years.
It noted that the weaker external conditions have hurt business and consumer sentiment and threaten to disrupt investment in Southeast Asia.
"The subregion’s performance in the first quarter shows signs of slowing, particularly for those reliant on external demand, despite delays in implementing the US reciprocal tariffs and some frontloading of exports," ADB said.
With the exception of Indonesia, all Southeast Asian economies are expected to register slower growth over the next two years.
For Indonesia, ADB maintained its growth forecast at 5.0 per cent in 2025 and 5.1 per cent in 2026, supported by resilient domestic demand despite soft net exports.
Malaysia’s gross domestic product (GDP) growth forecast was cut to 4.3 per cent in 2025 and 4.2 per cent in 2026, from 4.9 per cent and 4.8 per cent previously, due to weaker prospects for trade and investment amid global uncertainty.
"Despite strong first-quarter growth, concerns over US tariffs have dampened export and investment prospects," ADB said.
Singapore’s growth forecast was slashed to 1.6 per cent in 2025 and 1.5 per cent in 2026, down from April’s 2.6 per cent and 2.4 per cent projections, as external sector weakness threatens to spill over into domestic activity.
On inflation, ADB said average rates in Southeast Asia have come in below earlier projections for both 2025 and 2026.
It noted that inflation in most economies had eased below central bank targets in the first five months of 2025, due to falling energy and food prices, subdued consumer demand and stronger regional currencies.
The inflation forecast for Southeast Asia in 2025 was revised down to 1.5 per cent, gradually rising towards 2.5 per cent in 2026.
ADB forecast Malaysia’s inflation at 2.4 per cent for both 2025 and 2026, with a five-month average of 1.5 per cent, supported by low oil prices and delayed tax reforms.
For the Philippines, inflation is projected at 2.2 per cent in 2025 and 3.0 per cent in 2026, after averaging 1.8 per cent in the first half on soft food inflation.
Singapore’s inflation averaged 0.9 per cent over the first five months, prompting ADB to lower its forecast to 1.0 per cent in 2025 and 1.2 per cent in 2026.
Thailand’s inflation averaged 0.5 per cent in the same period, with forecasts revised down to 0.5 per cent in 2025 and 0.8 per cent in 2026. Vietnam’s inflation is expected to remain below 4.0 per cent through 2026.
-- BERNAMA
