Despite
the Middle East conflict, ASEAN+3 maintained solid growth momentum in
the first half of 2026, supported by firm domestic demand and strong
artificial intelligence (AI)-related exports, according to a new report
by the ASEAN+3 Macroeconomic Research Office (AMRO).
The regional grouping—comprising the 10 ASEAN member states plus China, Japan, and South Korea—is now projected to grow by 4.1% in 2026, slightly higher than the 4.0% forecast in AMRO’s June interim update, according to the “Quarterly Update of the ASEAN+3 Regional Economic Outlook (AREO),” which was released late July.
The regional grouping—comprising the 10 ASEAN member states plus China, Japan, and South Korea—is now projected to grow by 4.1% in 2026, up slightly from the 4.0% forecast in AMRO's June interim update, according to the Quarterly Update of the ASEAN+3 Regional Economic Outlook (AREO) released in late July. Growth is expected to moderate slightly to 4.0% in 2027.
The upgraded outlook reflects sustained strength in the region’s technology sector, particularly robust demand for semiconductors and other AI-related products, as well as a more favorable global commodity price outlook.
“ASEAN+3 has remained resilient, supported by firm domestic demand and its central role in global AI supply chains,” AMRO Chief Economist Dong He said. “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.”
The ASEAN economies are projected to expand by 4.8% in both 2026 and 2027, while the Plus-3 economies are expected to grow by 3.9% this year and 3.8% next year.
Among ASEAN members, Vietnam is forecast to post the fastest growth in 2026 at 7.5%, followed by Indonesia (5.0%), Malaysia (4.9%), Singapore (4.8%), Lao PDR (4.6%), Cambodia (4.2%), the Philippines (4.1%), Myanmar (2.5%), Thailand (2.4%), and Brunei (1.9%).
Among the Plus-3 economies, China is expected to grow by 4.5%, followed by Hong Kong, China (3.4%), South Korea (3.1%), and Japan (0.6%).
ASEAN+3 exports surged by nearly 20% year-on-year in the first quarter, with AI-enabling goods accounting for almost two-thirds of the increase.
Tourism also continued to support export growth. Tourist arrivals across the region rose 7.5% year-on-year in the first quarter, with Chinese visitors accounting for more than one-third of the increase.
Headline inflation is forecast at 1.6% in 2026, lower than projected in the June interim update, reflecting assumptions of softer global commodity prices.
Inflationary pressures have remained broadly contained, with price increases concentrated mainly in energy and transport, while core inflation has risen only modestly. However, food inflation could accelerate as higher input costs and adverse weather conditions feed through to consumer prices, AMRO said.
Looking ahead, firm household spending, resilient investment, and robust semiconductor and electronics exports are expected to continue driving regional growth. Supply disruptions affecting energy and industrial inputs have proved less severe than initially feared, allowing manufacturing activity to continue expanding.
Still, AMRO warned that the ASEAN+3 outlook remains subject to significant uncertainty. A renewed escalation of the Middle East conflict could push up energy, shipping, and food costs, while weaker-than-expected demand for technology products could weigh on exports and investment.
“The wide range of plausible outcomes underscores the importance of continued vigilance and sound macroeconomic policies,” He said. “Policymakers will need to respond flexibly to differing domestic conditions and rapidly evolving external risks, particularly the AI cycle and the Middle East conflict.”
The regional grouping—comprising the 10 ASEAN member states plus China, Japan, and South Korea—is now projected to grow by 4.1% in 2026, slightly higher than the 4.0% forecast in AMRO’s June interim update, according to the “Quarterly Update of the ASEAN+3 Regional Economic Outlook (AREO),” which was released late July.
The regional grouping—comprising the 10 ASEAN member states plus China, Japan, and South Korea—is now projected to grow by 4.1% in 2026, up slightly from the 4.0% forecast in AMRO's June interim update, according to the Quarterly Update of the ASEAN+3 Regional Economic Outlook (AREO) released in late July. Growth is expected to moderate slightly to 4.0% in 2027.
The upgraded outlook reflects sustained strength in the region’s technology sector, particularly robust demand for semiconductors and other AI-related products, as well as a more favorable global commodity price outlook.
“ASEAN+3 has remained resilient, supported by firm domestic demand and its central role in global AI supply chains,” AMRO Chief Economist Dong He said. “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.”
The ASEAN economies are projected to expand by 4.8% in both 2026 and 2027, while the Plus-3 economies are expected to grow by 3.9% this year and 3.8% next year.
Among ASEAN members, Vietnam is forecast to post the fastest growth in 2026 at 7.5%, followed by Indonesia (5.0%), Malaysia (4.9%), Singapore (4.8%), Lao PDR (4.6%), Cambodia (4.2%), the Philippines (4.1%), Myanmar (2.5%), Thailand (2.4%), and Brunei (1.9%).
Among the Plus-3 economies, China is expected to grow by 4.5%, followed by Hong Kong, China (3.4%), South Korea (3.1%), and Japan (0.6%).
ASEAN+3 exports surged by nearly 20% year-on-year in the first quarter, with AI-enabling goods accounting for almost two-thirds of the increase.
Tourism also continued to support export growth. Tourist arrivals across the region rose 7.5% year-on-year in the first quarter, with Chinese visitors accounting for more than one-third of the increase.
Headline inflation is forecast at 1.6% in 2026, lower than projected in the June interim update, reflecting assumptions of softer global commodity prices.
Inflationary pressures have remained broadly contained, with price increases concentrated mainly in energy and transport, while core inflation has risen only modestly. However, food inflation could accelerate as higher input costs and adverse weather conditions feed through to consumer prices, AMRO said.
Looking ahead, firm household spending, resilient investment, and robust semiconductor and electronics exports are expected to continue driving regional growth. Supply disruptions affecting energy and industrial inputs have proved less severe than initially feared, allowing manufacturing activity to continue expanding.
Still, AMRO warned that the ASEAN+3 outlook remains subject to significant uncertainty. A renewed escalation of the Middle East conflict could push up energy, shipping, and food costs, while weaker-than-expected demand for technology products could weigh on exports and investment.
“The wide range of plausible outcomes underscores the importance of continued vigilance and sound macroeconomic policies,” He said. “Policymakers will need to respond flexibly to differing domestic conditions and rapidly evolving external risks, particularly the AI cycle and the Middle East conflict.”
Published: July 31, 2026
