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ASEAN cuts 2025 growth outlook to 4.5% amid uneven momentum
Vietnam remains the fastest-growing major economy, with growth forecast at 7.4 per cent in 2025, while Indonesia is expected to maintain steady growth around 5-5.1 per cent. Cambodia and the Philippines are expected to post resilient growth near 5 per cent, while Thailand and Singapore face slower momentum.
For 2026, ASEAN’s GDP growth is projected at 4.4 per cent. Vietnam is forecast to grow at a solid 6.4 per cent, while Indonesia is expected to maintain stable growth at 5.1 per cent. The Philippines is projected to expand by 5.3 per cent, Cambodia by 5 per cent, and Malaysia by 4.3 per cent. Thailand and Singapore are expected to see slower growth of 1.6 per cent and 2.1 per cent respectively. Inflation pressures are projected to remain elevated in Laos and Myanmar, though easing compared with 2025.
ASEAN’s 2025 growth forecast has been lowered to 4.5 per cent as global uncertainty persists, with inflation easing before rising slightly in 2026.
Vietnam leads regional growth.
Trade momentum is slowing after front-loading effects fade, but strong FDI inflows and deeper regional integration continue to support ASEAN’s medium-term economic outlook.
ASEAN’s merchandise trade showed strong momentum in 2024, expanding 8.8 per cent to reach $3.8 trillion, driven by sustained demand from major trading partners, particularly China and the United States. In the first half of 2025, merchandise trade surged 17.4 per cent due to export front-loading ahead of tariff hikes. However, trade prospects for the second half of 2025 and early 2026 are expected to weaken as these one-off effects taper off and external vulnerabilities intensify, as per the brief.
Foreign direct investment trends remain a bright spot for the region. While global FDI rose modestly by 3.7 per cent in 2024—largely influenced by volatile financial conduit flows—ASEAN recorded a stronger 8.7 per cent increase in inflows to $230.8 billion. Key recipients included Indonesia, Malaysia, Singapore, Thailand, and Vietnam. In the first half of 2025, ASEAN’s FDI inflows rose a further 12.7 per cent, contrasting with a 3 per cent decline in global FDI, signalling sustained investor confidence in the region.
Looking ahead, ASEAN continues to be viewed as an attractive investment destination, with 60 per cent of firms surveyed by Boston Consulting Group indicating plans to invest in the region within the next 12 months. To sustain this momentum, ASEAN is strengthening credibility, capability, and compliance through deeper regional integration.
The ongoing implementation of the ASEAN Comprehensive Investment Agreement, the ASEAN Trade in Services Agreement, and the upgraded ASEAN Trade in Goods Agreement is expected to enhance transparency, resilience, and competitiveness, reinforcing ASEAN’s position as a single market and integrated production base, the brief added.
Fibre2Fashion News Desk (SG)