Modest growth forecast for ASEAN+3

East Asian and Southeast Asian economies are seen to register a modest 4 percent growth this year on the back of rising protectionism and uncertainties over the United States trade policies, a regional think tank said Jan 21.

The Singapore-based ASEAN+3 Macroeconomic Research Office (AMRO) released its latest report on ASEAN+3 economies — the 10 members of the Association of Southeast Asian Nations and their three dialogue partners: China, Japan, and South Korea.

AMRO's report noted a "solid performance" for the ASEAN+3 region in 2025, thanks to less severe tariff outcomes than initially expected and resilient technology export growth, but US trade policy uncertainty is expected to pressure external demand in 2026.

He Dong, AMRO's chief economist, said while risks around the baseline outlook are becoming more balanced, uncertainty remains elevated.

"Geopolitical tensions since the start of the year remind us that we now operate in a world where shocks can emerge quickly and unpredictably," He said in a Jan 21 webinar.

He said geopolitical tensions may cause major realignment in asset prices, such as exchange rates, which in turn could also change the region's financial conditions, hurt investor sentiment, and limit capital flows.

He said policy readiness will be essential for navigating near-term risks, while diversifying growth drivers and deepening regional economic integration will keep the region resilient in the long term.

Allen Ng, AMRO's group head and principal economist, said the booming artificial intelligence (AI) industry has supported ASEAN+3 export and investment growth in 2025.

He said that in 2026, the key risks include continued US trade and macro policy uncertainty, a possible correction in AI-driven technology demand, and more volatile global financial markets.

"Delay in downstream AI deployment or capacity overhang could weigh on regional exports," Ng said.

But he added that a stronger-than-anticipated global semiconductor demand might lead to a "durable, higher potential growth" in the regional economy.

Ng also noted that AMRO has revised the outlook upward for some individual economies.

Most notably, AMRO sees Vietnam's GDP expanding by 7.6 percent compared with the 6.4 percent growth outlook that AMRO projected last October.

Singapore, meanwhile, is seen to grow to 3 percent in 2026, up from the previous 1.7 percent growth outlook. Malaysia's GDP is seen to rise by 4.4 percent, up from the previous 4 percent.

"Vietnam is not just one of the fastest-growing economies in the region, but also the world. And we expect the economy to continue to grow at a relatively high pace," Ng said.

Ng said Vietnam has also seen "very positive structural change" and industrial upgrade in the last few years.

"I think going forward, the expectation is such that Vietnam is likely going to be able to maintain a rapid pace of growth, especially vis-a-vis the rest of the economies in the region," Ng said.

In the case of Malaysia, which is a major tech exporter, Ng said there are "encouraging indicators" when it comes to investment, especially those related to emerging sectors such as data centers and electronics.

"So, I think this overall trend that we are seeing in the region is actually playing out in Malaysia quite clearly," Ng said.

Philippine growth outlook, meanwhile, was slightly downgraded to 5.3 percent compared with the previous 5.5 percent growth forecast that was issued last October.

He, AMRO's chief economist, said private investment in the Philippines needs to be supported by investor confidence, but such sentiment was affected by controversies over alleged corruption in flood control projects.

"When we think about the Philippines economy, it has been growing steadily, but (its growth) trend has not come back to the pre-pandemic trend," He said.

He said the Philippines is also vulnerable to climate-related risks, so it is important to strengthen the country's infrastructure to make the economy more resilient against natural disasters.