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As ASEAN enters 2026, economic growth in the region is still expected to remain relatively strong. The Asian Development Bank projects ASEAN’s GDP growth at 4.4% this year, while Thailand’s growth is forecast at only 1.6%. This gap reflects multiple economic challenges that are not supportive of Thailand’s GDP growth.
One key factor is tourism, which is a major sector of the Thai economy. The Tourism Authority of Thailand estimates that the total number of foreign tourists in 2025 will be 8 percent lower than in 2024. Tourism revenue from late December to early this year may decline by around 2–9%. This suggests that the impacts of international tensions and natural disasters may continue into this year, affecting economic sectors that depend heavily on tourism income.
Rising international tensions within ASEAN, particularly between Thailand and Cambodia, highlight the difficulty of strengthening ASEAN’s role amid conflicts. This challenge is more complex as ASEAN has become a strategic arena where major powers are seeking to assert influence and counterbalance one another politically.
The Thailand–Cambodia situation is not only a diplomatic and political challenge, but also a disruption to cross-border trade, affecting trade on both sides and likely to continue impacting trade this year alongside ongoing border tensions.
In addition, industry and investment are affected by supply chain disruptions, undermining the Thailand Plus One strategy that seeks to link supply chains across CLMV countries with Thailand as the hub. As parts and raw materials cannot move smoothly across borders, this may lead foreign investors to consider relocating their production bases.
Environmental issues are another major challenge for ASEAN. Over the past year, the region has faced several natural disasters, causing damage to the economy, lives, and property. Disaster management must therefore be a key ASEAN agenda in 2026. At the same time, ASEAN must respond to increasingly strict global environmental goals, including reducing greenhouse gas emissions in the industrial sector and transitioning to clean energy. These efforts require substantial financial resources. At the same time, developing countries within ASEAN still seek to advance their industrial growth, leaving ASEAN with the challenge of addressing ever-intensifying environmental measures.
Another issue to watch is the impact of U.S. tariff measures under President Trump, which have pushed ASEAN to seek new markets, especially those with strong purchasing power. One key option is the European Union, which has taken on a more proactive role in trade within the region. The EU has free trade agreements with Singapore and Vietnam, finalized the negotiations with Indonesia last year, and is in advanced negotiations with Thailand, the Philippines, and Malaysia. This makes 2026 an important year to monitor progress on these agreements. The EU is therefore an attractive new market, though it also presents challenges due to strict environmental requirements.
Toward the end of last year, EU environmental measures showed signs of slowing. These include the delay in enforcing the EUDR, eased conditions under the CSDDD, and revisions to the CBAM. These developments reflect growing tension between business interests and environmental objectives. Nevertheless, environmentally related trade measures are expected to remain a global trend.
This year, the CBAM will be fully implemented, affecting ASEAN exports, especially iron and steel and aluminum. The measure is pushing ASEAN countries to strengthen environmental practices and introduce carbon pricing mechanisms for carbon-intensive industries. Businesses and consumers will need to adjust to these carbon pricing systems. Meanwhile, the delay of the EUDR provides temporary relief for ASEAN exporters of covered agricultural products, which represent significant export value.
Technology, including the rapid expansion of AI, is accelerating digital transformation in business. Investment in digital, especially digital infrastructure such as data centers, remains a priority this year to meet regional demand. Beyond Singapore, which hosts major multinational data centers, such investments are expanding to Indonesia, Malaysia, Vietnam, and Thailand.
ASEAN, under the chairmanship of the Philippines this year, faces a period of volatility and change. This year will be a crucial test in elevating ASEAN’s role comprehensively. The challenges of the new global context, from global economic trends, geopolitical tensions, environmental issues, and digital transformation, will continue to persist. It is ASEAN’s responsibility to respond and adapt, while pursuing proactive policies to navigate this demanding year effectively.
Author:
Ms. Patcha Thamrong-ajariyakun
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: 13071
Date: Wednesday, Jan. 7, 2026
Page: 8 (bottom)
Column: “Asean Insight”
