US Trade Tensions Drive ASEAN+3 Closer Together
ASEAN+3 Outlook Dims Amid US Tariff Pressures, Reinforcing Urgency for Regional Integration
The ASEAN+3 Macroeconomic Research Office (AMRO) has revised its regional growth forecast downward in its latest July update of the ASEAN+3 Regional Economic Outlook (AREO), citing heightened global uncertainties—particularly those stemming from evolving US tariff measures.
According to the updated projections, the ASEAN+3 region is now expected to grow at 3.8 percent in 2025 and 3.6 percent in 2026. These forecasts mark a notable reduction from April’s projections of 4.2 percent and 4.1 percent, respectively.
The key difference lies in the incorporation of the newly announced US tariffs, which were not factored into the April outlook. The tariffs—part of a broader shift in US trade policy—have cast a cloud over the economic outlook for the region, which comprises the 10 ASEAN member states, along with China, Japan, Korea, and Hong Kong, China.
Despite these external pressures, AMRO Chief Economist Dr. Dong He emphasized that ASEAN+3 enters this period of global volatility from a position of relative strength: “Encouragingly, the ASEAN+3 region enters this period of global trade turbulence from a position of relative strength and resilience. Most regional policymakers have acted early to cushion the impact of the trade shock, and policy space remains available for further support if needed,” he said.
Indeed, monetary and fiscal policy tools remain at the disposal of many governments in the region, enabling a more proactive response to potential economic disruptions. Some economies have already deployed targeted support measures to safeguard vulnerable sectors and maintain economic momentum.
Resilient Fundamentals Amid Global Shocks
Inflation across the region has continued to moderate, offering some breathing room for central banks.
While oil prices temporarily spiked due to tensions in the Middle East, the overall inflation trajectory remains manageable. This has allowed many countries to maintain accommodative policy stances while closely monitoring external risks. Meanwhile, the region’s financial markets have displayed a degree of resilience. Regional currencies have generally appreciated against the US dollar—a reflection of investor unease over US policy uncertainty and confidence in ASEAN+3’s economic fundamentals.
However, AMRO cautions that the economic landscape remains highly uncertain. The most pressing risk is the escalation of US tariffs, which could expand to cover a broader range of products, disrupting trade flows and undermining investment confidence.
Published on 30/07/2025
By Nicholas.