Kuala lumpur: ASEAN economies are expected to maintain growth above four per cent despite a challenging global environment, with projections at 4.4 per cent in 2025 and 4.2 per cent in 2026, according to ASEAN+3 Macroeconomic Research Office (AMRO) chief economist Dong He.

According to BERNAMA News Agency, Dong He stated that the moderate downward revision from AMRO’s April forecast was primarily due to the impact of US tariffs. He emphasized that ASEAN’s fundamental strengths, such as dynamic domestic markets, deepening regional integration, and proven crisis management capabilities, position the region well to withstand these challenges.

The sustained growth in the region is attributed to robust domestic demand, a more diversified economic base, and the policy space to respond effectively to external shocks. Several central banks have already eased monetary policy, and governments have implemented targeted fiscal measures to support affected sectors.

However, there are significant downside risks, including the unpredictability of US protectionist policies. Dong He noted that under an adverse scenario of further escalation, ASEAN growth could drop below three per cent in 2026, marking the weakest growth since the Global Financial Crisis, excluding the pandemic years. This scenario involves additional tariffs on BRICS-aligned economies and significant tariffs on previously exempt sectors such as semiconductors and pharmaceuticals.

Dong He also highlighted the ambiguity surrounding critical details like the definition of transshipment, which could dramatically impact regional supply chains. Non-tariff protectionist measures, including tighter investment screening and expanded export controls, could further exacerbate these challenges.

In response to rising global protectionism, there is renewed momentum for ASEAN integration, emphasizing the strategic need for deepening regional economic linkages. Key areas for integration include enhancing intra-regional investment flows, infrastructure, and connectivity, alongside pursuing deeper regional integration and broader global linkages.

While intra-ASEAN trade represents 23 per cent of total exports, there remains substantial untapped potential in investment linkages. Dong He noted that Timor-Leste’s accession as the 11th member of the bloc could present new opportunities for trade and investment, though it would require careful coordination and capacity-building support for smooth integration.

Dong He concluded by stressing that the current environment makes ASEAN integration not just desirable but essential. By leveraging complementary strengths across member economies, from frontier markets with demographic dividends to advanced economies with technological capabilities, the region can create virtuous cycles of investment, technology transfer, and shared prosperity.