{"id":108672,"date":"2025-06-30T20:07:54","date_gmt":"2025-06-30T13:07:54","guid":{"rendered":"https:\/\/www.itd.or.th\/?post_type=itd-data-center&p=108672"},"modified":"2025-06-30T20:07:55","modified_gmt":"2025-06-30T13:07:55","slug":"68_39","status":"publish","type":"itd-data-center","link":"https:\/\/www.itd.or.th\/en\/itd-data-center\/68_39\/","title":{"rendered":"ASEAN Amid Global Volatility"},"content":{"rendered":"\n

The global economy is facing heightened volatility, undermining an already fragile recovery.<\/strong> The World Bank has revised its global growth forecast for 2025 down to just 2.3%, marking the weakest performance since the 2008 global financial crisis. The main drivers are increased protectionist measures and high policy uncertainty. In addition, escalating geopolitical conflicts\u2014especially in the Middle East\u2014are likely to push inflation higher and further slow global economic growth. Nevertheless, this period of global economic and political turbulence presents a critical opportunity for ASEAN to adopt a more proactive approach to adaptation.<\/p>\n\n\n\n

Trade barriers and policy uncertainty are significantly hindering global economic growth, particularly due to the United States\u2019 unilateral tariff increases.<\/strong> These measures are putting immense pressure on global manufacturing, investment, and trade, with countries like Vietnam, Cambodia, Lao PDR, Myanmar, and Thailand being particularly affected by higher U.S. tariff rates compared to other nations.<\/p>\n\n\n\n

Rising geopolitical tensions are further compounding global economic challenges.<\/strong> The recent escalation in the Middle East could potentially lead to a closure of the Strait of Hormuz, the world’s most critical oil transport route. JPMorgan Chase & Co. estimates that if this happens, crude oil prices could surge to $120\u2013130 per barrel. This would drive up global inflation, weaken consumer purchasing power, force central banks to raise interest rates, increase borrowing costs, slow down investment, and raise the risk of a global recession.<\/strong><\/p>\n\n\n\n

The intensifying strategic rivalry between the United States and China is directly affecting trade, production, and economic dynamics in the region.<\/strong> Both powers are vying to integrate ASEAN into their respective supply chains and economic networks. This creates opportunities for ASEAN to benefit from increased investment and market access. However, it also presents challenges, such as being pressured to align with one side or suffering from trade restrictions that may hinder economic growth and regional integration.<\/p>\n\n\n\n

Vietnam serves as a key example of this dynamic.<\/strong> While it has greatly benefited from the relocation of manufacturing out of China during the trade war\u2014emerging as a new \u201cglobal factory\u201d for leading technology firms\u2014it is also facing pressure from the U.S. to reduce its economic and technological reliance on China. At the same time, Vietnam continues to maintain strong ties with China as its top trade partner and major import source. Recently, Vietnam gained the status of a \u201cBRICS Partner Country,\u201d reflecting its effort to diversify economic cooperation and reduce overdependence on any single major power.<\/p>\n\n\n\n

ASEAN\u2019s reliance on exports and integration into global supply chains makes it inherently vulnerable to external shocks.<\/strong> The global economic slowdown and rising inflation directly impact export revenues, consumer purchasing power, and investment in the region. This could worsen pre-existing challenges, such as high debt levels in countries like Malaysia and Lao PDR, which limit their capacity to implement fiscal stimulus measures.<\/p>\n\n\n\n

Despite this uncertainty, ASEAN still has the opportunity to turn crisis into opportunity.<\/strong> The key lies in strengthening internal regional capacity by reducing reliance on external markets and building a robust intra-regional market. This can be achieved through genuine digital integration, such as cross-border payment linkages, digital trade facilitation platforms, and improving the efficiency of the ASEAN Single Window. These efforts will strengthen intra-ASEAN supply chains and reduce vulnerability to external shocks.<\/p>\n\n\n\n

Furthermore, ASEAN should enhance supply chain resilience through technology and innovation, promote high value-added industries such as advanced semiconductors and AI, and avoid overdependence on a single source for production or exports. This approach will help spread industrial risks and leverage technology to strengthen regional manufacturing capabilities.<\/p>\n\n\n\n

In a volatile world, ASEAN cannot remain passive. Accelerated adaptation, stronger cooperation, and a forward-looking approach to new opportunities will be essential for ASEAN to navigate this challenging period and continue playing a vital role in driving global economic growth.<\/p>\n\n\n\n

Author:
Ms. Warunya Yossai
Senior Researcher
International Institute for Trade and Development (Public Organization)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section\/World Beat
Volume: 38 Issue: 12931
Date: Wednesday, Jun. 25, 2025
Page: 8 (bottom)
Column: \u201cAsean Insight\u201d<\/p>\n","protected":false},"author":501,"featured_media":108673,"template":"","categories":[35,29],"tags":[352,1180,816,1179,876,1181],"class_list":["post-108672","itd-data-center","type-itd-data-center","status-publish","has-post-thumbnail","hentry","category-article-en","category-data-center-en","tag-asean-en","tag-asean-trade","tag-geopolitics-en","tag-global-economy","tag-inflation-en","tag-regional-integration"],"pp_force_visibility":null,"pp_subpost_visibility":null,"pp_inherited_force_visibility":null,"pp_inherited_subpost_visibility":null,"yoast_head":"\nASEAN Amid Global Volatility - ITD - International Institute for Trade and Development<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.itd.or.th\/en\/itd-data-center\/68_39\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ASEAN Amid Global Volatility - ITD - International Institute for Trade and Development\" \/>\n<meta property=\"og:description\" content=\"The global economy is facing heightened volatility, undermining an already fragile recovery. 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