ASEAN Economies To Maintain Growth Above 4 Pct Despite Global Challenges - Economist
SINGAPORE, July 23 (Bernama) -- ASEAN economies are expected to maintain growth above four per cent despite a challenging global environment, with projections at 4.4 per cent in 2025 and 4.2 per cent in 2026, according to ASEAN+3 Macroeconomic Research Office (AMRO) chief economist Dong He.
He said the moderate downward revision from AMRO’s April forecast was primarily due to the impact of US tariffs.
“Nevertheless, it is important to reiterate that despite these challenges, ASEAN's fundamental strengths -- its dynamic domestic markets, deepening regional integration and proven crisis management capabilities -- position it well to weather this storm,” he told Bernama.
He explained that the region’s sustained growth was underpinned by three factors -- robust domestic demand, a more diversified economic base, and policy space to respond.
He noted that several central banks had already eased monetary policy, while governments had implemented targeted fiscal measures to support affected sectors.
However, significant downside risks remain for the region, including the continued unpredictability of US protectionist policies, with the tariff landscape having evolved significantly since April 2.
He said that under an adverse scenario of further escalation, AMRO estimates ASEAN growth could drop below three per cent in 2026, the weakest growth since the Global Financial Crisis, excluding the pandemic years.
The scenario includes BRICS-aligned economies facing an additional 10 per cent tariff, and previously exempt sectors such as semiconductors and pharmaceuticals are hit with a 25 per cent tariff.
“Furthermore, critical details remain unclear, such as the definition of transshipment, which could dramatically affect regional supply chains,” he said, adding that non-tariff protectionist measures including tighter investment screening and expanded export controls could further exacerbate these impacts.
Meanwhile, he said rising global protectionism has catalysed renewed momentum for ASEAN integration, underscoring the strategic imperative of deepening regional economic linkages.
Key areas for integration include enhancing intra-regional investment flows, infrastructure and connectivity as well as pursuing a dual approach of deepening regional integration and broadening global linkages.
He noted that while intra-ASEAN trade represents 23 per cent of total exports, there remains substantial untapped potential in investment linkages.
On Timor-Leste’s accession as the 11th member of the bloc, he said the expanded membership could bring new opportunities for trade and investment, though it would require careful coordination and capacity-building support to ensure smooth integration.
“The current environment makes ASEAN integration not just desirable but essential. By leveraging complementary strengths across member economies -- from frontier markets with demographic dividends to advanced economies with technological capabilities -- the region can create virtuous cycles of investment, technology transfer and shared prosperity,” he said.
-- BERNAMA
