Amro cuts all Asean+3 economies' growth forecasts

Business Times

23-07-2025

[SINGAPORE] The Asean+3 Macroeconomic Research Office (Amro) trimmed its 2025 growth projections for all ten Asean member states as well as China, Hong Kong, Japan and South Korea – but spared Vietnam with a half-point upgrade.
The downward revisions of between 0.2 and two percentage points reflect the impact of US tariffs set to take effect next Friday (Aug 1), said Amro in its latest quarterly update released on Wednesday.
Earlier estimates in April did not include the impact of then-newly announced US tariffs, said the research organisation that monitors Asean+3 economies, a region that altogether contributes to more than 40 per cent of global economic expansion.
Vietnam is the only economy that saw an improvement in its 2025 growth forecast to 7 per cent from Amro's earlier April forecast of 6.5 per cent.
Amro chief economist He Dong said in a press briefing on Wednesday: 'The bumping up of Vietnam's growth is really a reflection of the much better outturn in the first half of the year, which automatically gave us the room to revise up the whole-year growth forecast.'
The country notched a multi-year high gross domestic product growth of 7.52 per cent in the first half of 2025, driven by healthier domestic consumption, robust exports and strong improvement in the manufacturing and services sectors.
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Acknowledging that Vietnam stands out as one of the most exposed to US tariffs, He maintained that the nation has the policy space to support economic activity if needed.
The chief economist added that some of Vietnam's ongoing reforms to enhance its investment environment and improve infrastructure efficiency place it in a more resilient position looking ahead.
'Beyond the short term, what is more important is also to integrate much more deeply with other regional economies in attracting foreign direct investment,' he said.
Asean's saving grace: Resilient domestic demand
As a whole, Asean is now expected to grow 4.4 per cent in 2025, down from an earlier forecast of 4.7 per cent.
Across the other major economies, Thailand faced a 0.8 percentage point cut in growth; the Philippines at 0.7 percentage point; Malaysia at 0.5 percentage point; Singapore at 0.4 percentage point; while Indonesia saw a 0.2 percentage point drop.
On Indonesia, He noted that the largest South-east Asian economy is primarily driven by domestic demand, which means it is less open to international trade and thus less vulnerable.
The chief economist added that China is Indonesia's largest export market and, hence, reasonably protected from the recent round of tariffs.
'Our recent consultations with Indonesia show that the economy is really doing very well and its domestic demand-driven growth momentum is there,' said He. 'Both monetary and fiscal policies have a lot of space to support the economy if necessary.'
On the Philippines, Amro group head and principal economist Allen Ng said that its downward revision to 5.6 per cent from 6.3 per cent was primarily due to the projected impact from slower global growth.
The economist explained the direct impact of US tariffs on the Philippines is weaker than in other regional economies due to its more domestic-centric economic structure, but a broader global slowdown will hit its exports, business sentiment and investment activities.
Regardless, growth in the Philippines continues to be very robust, said Ng.
'It will continue to be driven by robust private consumption activities, given multiple factors including continued stable labour market conditions, slower inflation currently, and the expectation of robust remittances going forward,' he noted.
A bleaker 2026
Amro's estimates for 2026 are not much rosier.
Impact from the wide-ranging US tariffs is projected to be more significant next year, said the international organisation, particularly for regional economies that face higher duties and rely more on external demand.
The region's growth forecasts for 2026 also took a beating – only Vietnam and Myanmar had their estimates bumped up, while the rest saw cuts.
Vietnam is now expected to grow at 6.5 per cent, down from an earlier forecast of 6.2 per cent while Myanmar should grow at 1.5 per cent, lower than April's estimate of 1 per cent.
Overall, however, Amro noted that continued strength in domestic demand and sustained external demand for electronics and tourism, is expected to continue to underpin regional growth.
Taming price pressures
On the other hand, inflation prints are looking better.
Headline inflation for the overall Asean+3 region is projected to remain 'low and stable' at 0.9 per cent in 2025 and 1 per cent in 2026.
This is down from an earlier April estimate of 1.7 per cent for both years.
'This outlook reflects stable commodity prices, including the normalisation of oil prices following the temporary volatility during the brief escalation of the Iran-Israel conflict,' said Amro.
Softer food prices and weaker global growth are expected to further ease inflationary pressures.
Additionally, subdued consumer demand and the ongoing reallocation of productive capacity in China are also likely to limit any increase in regional inflation, said the international organisation.
Silver linings
All in all, significant risks lie ahead, said Amro's He.
'If tariff measures continue to escalate, global trade could face substantial disruptions,' said the chief economist.
'The outlook gets more challenging if we add additional risk factors, such as tighter financial conditions and commodity price spikes, in light of continued geopolitical tensions.'
Regardless, He believes tariff and policy uncertainties from the US provide an opportunity for much tighter intra-regional integration.
'Asean+3's diversity, in my view, is one of its greatest assets,' said He. 'Economies in this region are at different stages of development with varied resource endowments and comparative advantages (and) can forge more integrated supply chains and production networks.'
He concluded: 'This diversity, when leveraged through coordinated policies and integration initiatives, will transform potential vulnerabilities into collective resilience for the region.'
He succeeded Dr Khor Hoe Ee as the organisation's chief economist on Jun 9. Dr Khor, whose term ended on May 26, held the position from 2016 to 2025.
Amro's next update is scheduled for October 2025.