The Asean+3 region is projected to grow by 4.1 per cent in 2026, up from the previous forecast of 4.0 per cent, before moderating slightly to 4.0 per cent in 2027, according to the Asean+3 Macroeconomic Research Office (AMRO).
In its July 2026 quarterly update of the Asean+3 Regional Economic Outlook (AREO) released today, the office said headline inflation is projected at 1.6 per cent in 2026, down from the previous forecast of 1.8 per cent, reflecting lower global commodity price assumptions.
AMRO said the upgraded outlook reflects sustained momentum in the region's technology sector, particularly robust demand for semiconductors and other artificial intelligence (AI)-related products, alongside a more favourable global commodity price outlook.
Firm household spending, resilient investment, and robust semiconductor and electronics exports are expected to continue driving growth.
Energy and industrial input supply disruptions proved less severe than initially feared, with manufacturing activity continuing to expand.
AMRO chief economist Dong He said Asean+3 has remained resilient, supported by firm domestic demand and its central role in global AI supply chains.
"The impact of the Middle East conflict has also been less severe than initially expected, although elevated energy and input costs continue to pose risks to inflation and industrial activity," he said in a virtual press briefing today.
Meanwhile, AMRO noted that inflationary pressures have remained broadly contained, with price increases concentrated mainly in energy and transport, while core inflation has risen only modestly.
However, it said food inflation could rise as higher input costs and adverse weather conditions feed through to price.
It added that the overall Asean+3 outlook remains subject to significant uncertainty.
Renewed escalation in the Middle East conflict could raise energy, shipping, and food costs, while weaker-than-expected
Technology demand could weigh on regional exports and investment.
AMRO said, given the importance of AI-related demand to the regional outlook, even a moderate slowdown in global technology investment to its 2024 pace could slow Asean+3 growth to 2.5 per cent in 2027, its weakest rate since the Asian Financial Crisis, excluding the pandemic years.
Financial market volatility and rising trade protectionism could also further weigh on the outlook.
He said the wide range of plausible outcomes underscores the importance of continued vigilance and sound judgement! macroeconomic policies.
"Policymakers will need to respond flexibly to differing domestic conditions and rapidly evolving external risks, particularly the AI cycle and the Middle East conflict," he added.
Source: Klsescreener
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<p>Time: November 2025<br /> By: WTO and International Trade Group, Legal Department – VCCI</p>
