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In 2026, the ASEAN economy continues to be classified as a region with high growth potential compared with the global economy. According to projections by the Asian Development Bank (ADB), ASEAN’s economy in 2026 is expected to expand by approximately 4.4%. Key growth drivers in the region include Vietnam, which is projected to record the highest growth rate at 6.4%, followed by the Philippines at 5.3%, Indonesia at 5.1%, and Malaysia at 4.3%. Thailand’s economy is expected to grow at a fragile rate of around 1.6%, due to structural problems in the manufacturing sector and high household debt.
ASEAN’s economic growth is mainly supported by domestic consumption, the recovery of the services sector, and investment in infrastructure and new industries. However, this growth is occurring amid structural risks that have not yet been seriously addressed.
The ADB report identifies key risks facing ASEAN as volatility in capital flows, the monetary policy direction of advanced economies, and rising public and private debt in many countries following prolonged economic stimulus over the past decade.
This assessment is consistent with the Trade and Development Report 2025 by the United Nations Conference on Trade and Development (UNCTAD), which states that economic growth rates alone do not reflect the quality of development if domestic financial structures and development foundations remain fragile, particularly due to reliance on the global financial system beyond the region’s control.
UNCTAD reports that although developing countries account for more than 40% of global GDP and over 45% of global merchandise exports, their share in global capital markets remains significantly smaller. Capital markets in developed countries are still more than three times larger than those in developing countries, resulting in significantly higher financing costs for ASEAN economies.
A key point emphasized by UNCTAD is that trade cannot be separated from finance. More than 90% of global trade depends on credit systems, payment mechanisms, and international money markets, which remain concentrated in developed countries. Even small changes in policy interest rates by the central banks of the United States or Europe can rapidly affect capital flows, exchange rates, and import–export costs in ASEAN countries.
Although ASEAN has made progress in trade integration through initiatives such as the ASEAN Free Trade Area, the RCEP agreement, and customs facilitation measures, the region still lacks strong regional financial mechanisms to absorb volatility from global financial cycles.
In terms of foreign direct investment (FDI), ASEAN remains one of the world’s major investment destinations, with developing countries receiving more than 50% of global FDI. However, from a structural perspective, most FDI remains concentrated in midstream and downstream manufacturing industries, while high-technology investment and high-value financial activities continue to be located mainly in developed countries.
ASEAN’s policy focus in recent years has emphasized tariff reduction, supply chain integration, and the attraction of FDI, which has helped enhance production capacity and employment. However, greater emphasis is needed on developing domestic capital markets, creating long-term financing sources, and increasing the effective participation of local firms in value chains.
ASEAN must accelerate its adjustment to address ongoing economic vulnerabilities through 2026 by managing structural risks related to exchange rate volatility, potentially rising financing costs, and increasingly strict trade and environmental standards in global markets.
The region should accelerate investment in technology, digital development, and workforce skills, alongside strengthening financial capacity and risk management. Greater cooperation is needed to develop a regional financial ecosystem, including regional capital markets, in order to reduce reliance on a single currency for trade and investment.
Author:
Ms. Namphueng Tassanaipitukkul
Senior Researcher
International Institute for Trade and Development (ITD)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section/World Beat
Volume: 39 Issue: 13061
Date: Wednesday, Dec. 24, 2025
Page: 8 (bottom)
Column: “Asean Insight”
