According to the latest research report by ESOMAR:
2025 FORECAST: Southeast Asian economies overcome “headwinds”
In 2025, Southeast Asian economies will face major challenges but can still overcome them,
thanks to strong exports and public capital spending.
2025 is forecast to be a challenging year for Southeast Asian countries,
as they seek to boost economic growth in the context of the world facing recession,
many geopolitical tensions as well as trade fragmentation, especially new tariffs from
the US - the country with the world's largest economy.
In Indonesia - the region's largest economy, the barriers are increasingly evident,
stemming from slowing household consumption due to the decline in the middle class.
In addition, a series of ambitious programs implemented by the newly formed government
could cause serious disruptions to the country's financial stability.
Meanwhile, Thailand is trying to revive its economy, which has been hit hard by the COVID-19 pandemic,
especially in the tourism and service sectors. However, low domestic consumption,
rising household debt and political instability could hinder this goal.
Analysts say that even Malaysia and Vietnam, two countries that recorded impressive
economic performance in 2024, will face the challenge of maintaining growth momentum
and continuing to attract foreign direct investment (FDI) amid growing global difficulties.
"The challenges will be daunting... Southeast Asian countries will have to navigate a high
level of global uncertainty while facing equally daunting domestic challenges," said Piter Abdullah,
executive director of the Segara Institute.
A common hurdle facing Southeast Asian countries is US President-elect Donald Trump's
announcement of a series of measures to protect goods produced in the country.
During his first term, Trump imposed high tariffs on Chinese goods, leading to a tariff war.
Under President Joe Biden, this policy has continued to expand.
Meanwhile, China is an important trading partner for many Southeast Asian countries.
Facing the risk of a new tariff war, analysts say Southeast Asian countries need to diversify their markets.
But this will not be easy, with some of Europe’s largest economies facing political uncertainty and
economic slowdowns, while East Asian powerhouses such as China and Japan are still struggling with deflation.
According to the Asian Development Bank’s (ADB) December 2024 economic forecast,
Southeast Asia’s growth is expected to rise from 4.5% to 4.7%, driven by strong exports and public
capital spending in major economies. Countries including Malaysia, Thailand, Singapore and Vietnam
are supported by domestic demand, low inflation and sustainable public investment.
However, the region still faces many risks, including geopolitical tensions, trade fragmentation and
extreme weather events such as the recent Typhoons Yagi (known in Vietnam as Typhoon No. 3) and Trami,
which have particularly affected the agriculture and infrastructure sectors. As a result, ADB forecasts
Southeast Asia’s growth to remain at 4.7% in 2025, despite the potential negative impact of Trump’s policies.
In addition, changes in US trade, fiscal and immigration policies could slow growth and push up inflation
in developing Asian countries. However, ADB said these impacts would not be immediately
apparent and would be felt mainly after 2025./.
ESOMAR Global Research will continue to update the latest news on global markets.
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