Manila: The ASEAN+3 Macroeconomic Research Office (AMRO) has revised upward its economic growth forecast for the ASEAN+3 region, predicting a stronger performance in 2026 fueled by robust demand for artificial intelligence (AI). This adjustment comes amidst ongoing tensions in the Middle East that have heightened economic uncertainties.
According to Philippines News Agency, in its July 2026 ASEAN+3 Regional Economic Update, AMRO has increased its growth projection for the region to 4.1 percent from the previous 4 percent forecast in June. The ASEAN+3 bloc, comprising 11 Southeast Asian countries, Japan, South Korea, China, and Hong Kong, is seen to benefit significantly from the AI-driven demand, which offsets potential setbacks from Middle Eastern conflicts.
AMRO's head and lead economist, Allen Ng, highlighted that the ASEAN+3 region plays a crucial role in global AI-related trade, accounting for about half of it. The unexpected surge in AI demand is not only boosting regional growth but also enhancing the economic outlook for countries with strong global supply linkages. Additionally, steady household spending, supported by favorable labor market conditions and income growth, along with a resurgence in tourism, particularly from Chinese travelers, are contributing to the region's export growth.
The growth forecast for Cambodia remains at 4.2 percent, Indonesia at 5 percent, Lao PDR at 4.6 percent, Myanmar at 2.5 percent, China at 4.5 percent, Hong Kong at 3.4 percent, Japan at 0.6 percent, and the Philippines at 4.1 percent. AMRO's chief economist, Dong He, noted that despite the Philippines being heavily impacted by the oil price shock, the country is poised to benefit from AI advancements due to its involvement in semiconductor exports, which will support its export growth.
Upgraded growth projections include Korea at 3.1 percent, Malaysia at 4.9 percent, Singapore at 4.8 percent, Thailand at 2.4 percent, and Vietnam at 7.5 percent. In contrast, Brunei's outlook was downgraded to 1.9 percent. For 2027, AMRO has revised upward the forecasts for Korea, Singapore, and Vietnam, while maintaining other projections for the region.
AMRO also reported that inflationary pressures are broadly contained, with a regional average forecast of 1.6 percent for 2026, a decrease from June's 1.8 percent prediction. This is attributed to anticipated lower global commodity prices. The Philippines' inflation forecast was adjusted downward due to lower oil prices and proactive central bank measures, which have helped manage broader inflationary pressures.
While inflation forecasts for Malaysia and Indonesia remain steady, Cambodia's was revised upward. Looking ahead to 2027, inflation is expected to average 1.6 percent across the region. However, AMRO cautioned that the growth outlook is subject to risks stemming from the Middle East conflict and the sustainability of the AI-driven technology cycle, which could affect energy and shipping costs, industrial input supplies, and food prices.
