ASEAN+3 Enters 2026 From a Position of Strength — But Two Storms Are Building Offshore

The ASEAN+3 region expanded 4.3% in 2025, outperforming expectations despite what regional economists describe as the most significant shift in global trade policy in decades, according to the AMRO ASEAN+3 Regional Economic Outlook 2026.

A Region Built on Firm Foundations

The ASEAN+3 Macroeconomic Research Office (AMRO) — whose membership spans the ten ASEAN states plus China, Hong Kong, Japan, and Korea — attributes the region’s resilience to firm domestic demand, robust export performance, sustained investment, and deepening intraregional trade linkages. The region enters 2026 with most economies retaining meaningful fiscal and monetary policy space, a buffer regional policymakers built deliberately following the shocks of the preceding decade.

Two Risks Now Dominate the Outlook

AMRO identifies the balance of risks as tilted firmly to the downside for the year ahead, driven by two distinct but interacting shocks. First, the Middle East conflict and the resulting disruption to energy supply through the Strait of Hormuz pose what AMRO calls a significant near-term threat to both regional growth and inflation. Second, shifting US trade policy continues to inject two-sided risk into technology demand and broader trade flows, with financial market volatility compounding the downside pressure from both channels simultaneously.

Semiconductors Anchor the Region’s Trade Position

Regional semiconductor exports remain a structural strength even amid the broader uncertainty. AMRO’s data tracks ASEAN-6 semiconductor exports — spanning Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam — as a critical driver of regional trade resilience, reflecting the bloc’s entrenchment in global chip and electronics supply chains at a moment when demand for AI-related hardware remains exceptionally strong globally, per AMRO’s full 2026 report.

China’s Property Drag Still Ripples Outward

Even as China’s export engine benefits from AI-driven demand, AMRO notes that overall Chinese investment remained slightly softer in the period under review, with spending on clean energy and advanced manufacturing only partly offsetting a prolonged property-sector adjustment. Given the depth of intraregional trade linkages AMRO’s own research documents, continued softness in Chinese domestic investment carries spillover implications for supply chains and demand across the wider ASEAN+3 bloc, even as China’s headline export growth remains robust.

The Regional Growth Picture, Country by Country

Within the bloc, growth trajectories are diverging. Indonesia, Singapore, and Vietnam are leading regional growth momentum into 2026, while Malaysia and Thailand continue to expand at a steadier, more moderate pace, and the Philippines lags due to domestic structural challenges, according to McKinsey’s Southeast Asia quarterly economic review. The Asia House Annual Outlook separately forecasts overall Asian growth easing to 3.8% from 4.1% according to WTO estimates, reflecting softer global demand, a modest China slowdown, and the fading effect of earlier supply-chain frontloading, though the region is still expected to outperform the global growth average, per Asia House’s 2026 outlook.

Preserving Policy Flexibility Is the Central Challenge

AMRO frames the region’s central policy challenge for 2026 not as responding to any single shock, but as preserving the flexibility to respond to whichever shock materializes first — whether a further escalation in Middle East energy disruption, a sharper-than-expected US tariff or technology-policy shift, or a deeper Chinese property-sector adjustment than currently modeled. For businesses and investors across Singapore, Malaysia, Indonesia, and the wider bloc, that framing suggests 2026 will reward economies and companies that maintain optionality rather than committing early to any single scenario for how the region’s twin external shocks ultimately resolve.