Southeast Asian economies saw better-than-expected export sales in the third quarter. Photo credit: ADB.
The Asian Development Bank (ADB) has raised its growth forecasts for Southeast Asia to 4.5% in 2025 and 4.4% in 2026 from 4.3% for both years. The upgrade reflects a strong third quarter in Indonesia, Malaysia, Singapore, and Viet Nam.
In its Asian Development Outlook (ADO) December 2025, ADB said some economies in Southeast Asia were buoyed by resurging exports and sectoral growth, while others were “constrained by high household debt, slowing investment, and infrastructure bottlenecks.” Despite global uncertainty, climate-related disruptions, and domestic political developments, the region remains resilient. Forecasts for 2026 took into account “expected improvements in domestic demand driven by fiscal and monetary stimulus.”
The report provided updated growth forecasts for selected countries in the region, including BIMP-EAGA members—Indonesia, Malaysia, and the Philippines.
Indonesia’s gross domestic product (GDP) is expected to grow 5.0% in 2025 from the previous forecast of 4.9%, with exports to the People’s Republic of China, ASEAN markets, the United States, and European Union trending upwards as well as increased industrial activity. Public spending also rose, while investment and household consumption growth moderated. The 2026 growth forecast is now at 5.1% from 5.0%.
The ADO also raised Malaysia’s growth forecasts to 4.5% from 4.3% for 2025 and 4.3% from 4.2% for 2026 on the back of strong domestic demand and exports and a mining rebound. In the third quarter, exports rose by 6.7% with higher demand from Singapore and the US and a 17.5% surge in the sale of electrical products.
Projections for Singapore’s economy were revised up to 4.1% in 2025 from 2.5% and to 2.1% for 2026 from 1.4%. Growth drivers include increased outputs from manufacturing and wholesale trade, steady growth in the services sector, and an investment rebound on higher public and private spending. “Growth prospects for 2026 have improved due to progress in trade negotiations with the US and the slower-than-expected rollout of possible sectoral tariffs on pharmaceuticals and semiconductors, while sustained global demand for artificial intelligence-related chips should provide additional lift and positive spillovers to the domestic economy,” the report said.
With stronger export growth and sustained foreign direct investment in the third quarter, Viet Nam’s economy is forecast to grow 7.4% for 2025 from the previous 6.7% projection and 6.4% for 2026 from 6.0%.
The growth forecast for Thailand is unchanged at 2.0% for 2025 and 1.6% for 2026.
Meanwhile, the report sees slower growth for the Philippines because of “weak infrastructure spending amid investigations of publicly funded projects and natural hazards.” It noted that GDP growth was at 4.0% in the third quarter but still averaged 5.0% for the past three quarters. The revised forecast is 5.0% for 2025 from the previous 5.6% and 5.3% for 2026 from 5.7%.