Asian Development Bank Lowers Growth Projections for Southeast Asia
The Asian Development Bank (ADB) has recently revised its growth projections for Southeast Asian economies, with notable downgrades for Singapore and Thailand. This adjustment reflects ongoing global economic challenges that have affected the region’s growth trajectory. The ADB’s update, released on September 30, highlights several factors contributing to these changes.
Overview of Growth Downgrades
According to the ADB, Southeast Asia is now expected to see a growth rate of 4.3% in 2025 and 2026, down from the previously projected 4.7%. This downward revision is attributed to persistent global growth deceleration and increasing trade uncertainty, compounded by domestic challenges that economies in the region are facing.
Singapore’s Economic Outlook
Looking specifically at Singapore, the ADB has reduced its growth forecast for 2025 to 2.5%, a slight drop from the earlier estimate of 2.6%. The economic growth for 2024 is expected to stand at 4.4%. The Singaporean government has also readjusted its own forecasts, now estimating growth between 1.5% to 2.5%, revised from an earlier range of 0% to 2%.
For 2026, the outlook is even less optimistic, with the ADB slashing the growth estimate to 1.4% from 2.4%. A private economists’ survey conducted by the Monetary Authority of Singapore in September showed an average growth prediction of 1.9% for the same year.
Despite a robust performance in the first half of 2025, the ADB anticipates a significant decline in growth as sectors dependent on exports, such as wholesale trade and transportation, start to cool off. Tariffs imposed by the United States, particularly pertaining to pharmaceuticals and semiconductors, are highlighted as factors that will weigh heavily on Singapore’s economy.
External Influences and Tariff Impacts
John Beirne, an ADB principal economist, explained that the variations in the growth forecasts for Singapore stem largely from external demand due to US tariffs. The revised expectations are a direct response to how these tariffs have influenced Singapore’s exports, which are remarkably significant compared to its overall economic activities.
The latest U.S. tariffs on pharmaceuticals, announced on September 25, are expected to have minimal overall impact on the Southeast Asian region due to existing exemptions and the targeted nature of the tariffs. Nonetheless, they still pose risks for specific sectors, particularly in Singapore, where such tariffs primarily apply.
Thailand’s Growth Projections
Thailand is also experiencing substantial downgrades in its growth forecasts. The ADB now projects the country’s growth in 2025 will slow to 2.0%, down from an earlier forecast of 2.8%. For 2026, the projection has been cut even further to 1.6%, a significant drop from the previous estimate of 2.9%. These reductions indicate a growing concern about internal and external factors limiting Thailand’s economic momentum.
A Look at Vietnam’s Resilience
In a contrast to Singapore and Thailand, Vietnam stands out as the only Southeast Asian economy to have seen an upward revision in its growth forecast for 2025, moving from 6.6% to 6.7%. This growth is driven by robust exports and a healthy surge in both the manufacturing and services sectors, in addition to heightened foreign direct investment.
Although Vietnam’s projected growth for 2026 has been adjusted to 6.0% from 6.5%, the country seems poised for resilience, bolstered by supportive fiscal and monetary policies that nurture domestic consumption. Nevertheless, external pressures such as reduced demand for logistics and other services due to tariffs may challenge its economic outlook.
Trade Pressures and Financial Implications
The ADB also highlights trade-related inflationary pressures as a concern for U.S. monetary policy, which could increase financial market volatility and disrupt capital flows. Such uncertainties can hinder financing and investment across the region, adding layers of complexity to the economic landscape.
In summary, the revised growth forecasts from the ADB underscore significant challenges for both Singapore and Thailand, set against a backdrop of global economic malaise and trade uncertainty. While some countries like Vietnam exhibit resilience, the overall economic atmosphere in Southeast Asia remains volatile and fraught with challenges.