Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
As 2025 unfolds, the ASEAN region presents a dynamic mix of opportunities and challenges for investors, cementing its position as one of the fastest-growing economic blocs globally. Benefiting from strong domestic consumption, youthful demographics, and increasing regional integration, ASEAN continues to draw attention from global markets. Despite uncertainties, such as potential monetary policy shifts and trade disruptions, the outlook for ASEAN remains optimistic.
Overall, GDP growth could be a bit stronger in 2025. The International Monetary Fund (IMF) is expecting 4.7% in 2025, after 4.6 in 2024. The Asian Development Bank (ADB) forecasts 4.7% for Southeast Asia. Vietnam is projected to continue outperforming its ASEAN peers, with an anticipated growth rate of 6.5% in 2025.
Asset managers highlight the region’s resilience, with Indonesia, the Philippines, and Vietnam emerging as standout performers due to robust infrastructure investment and expanding middle classes.
Invesco expects the recovery of global trade and tourism to be a key growth driver for the region. “We believe countries like Singapore and Malaysia are well-positioned to benefit from increased FDI and export growth. International tourism within ASEAN is steadily recovering, nearing pre-Covid levels, and we expect this positive trend to continue,” says Mike Shiao, Chief Investment Officer, Asia ex. Japan, at Invesco.
At the recent ASEAN Tourism Forum 2025, Roslan Abdul Rahman, Secretary-General of Malaysia’s Ministry of Tourism, Arts & Culture highlighted that tourism in the region remains resilient, with Vietnam showing a notable pickup.
The country welcomed 40% more tourists than in 2023, bringing in a total of $34.5 bn. Also Thailand saw surging arrivals with over 35 million visitors in 2024, generating over $52.54 bn in tourism revenue. The sector has a significant impact on both economies.
Stronger household consumption is further expected to boost the region. “Rate cuts, fiscal stimulus, lower inflation and higher wages will support domestic demand growth in most Emerging ASEAN economies in 2025,” says Simon Say Boon Lim, Senior Advisor at ETF provider Premia Partners.
McKinsey noted stable household consumption across most markets in the third quarter of 2024. Only Indonesia and Thailand saw a slowdown, while in the Philippines, Vietnam and Singapore private consumption picked up.
According to the World Bank, consumption is a significant driver of economic activity for the ASEAN countries. Final consumption expenditure accounts for over 90% of GDP in the Philippines, over 70% in Indonesia, Malaysia and Thailand, and over 60% of GDP in Vietnam.
Thus, keeping positive consumption momentum will be key for the region in 2025.
Challenges ahead for ASEAN
Geopolitical tensions remain a critical challenge to ASEAN’s outlook in 2025. With Donald Trump back in the White House, heightened US-China trade disputes could disrupt Southeast Asia’s trade dynamics. However, the impact is expected to vary across the region, as Jennifer Qiu, Global Market Strategist at J.P. Morgan Asset Management, notes.
“With high US tariffs, Chinese exporters might redirect excess capacity to the rest of Asia, putting pressure on profit margins of domestic manufacturers. This prompted countries like Indonesia and Vietnam to impose anti-dumping tariffs on some Chinese goods and the Thai government to investigate imported deflation from China,” Qiu explains.
Despite these challenges, ASEAN economies remain well-positioned to benefit in the long term. J.P. Morgan AM highlights that ASEAN’s share of US imports grew significantly, reaching 12.3% by late 2024, as companies diversified supply chains.
Furthermore, the “China + N” strategy, where corporations invest in alternative production bases outside China, has boosted foreign direct investment into ASEAN, cementing its role as a manufacturing hub.
From an investment perspective, the Trump administration introduces challenges for Asian equities. “Given the high correlation between Asia exports and earnings, tariffs could significantly impact Asian equities,” Qiu says.
She emphasizes that the effect of tariffs depends on how easily products can be replaced and how reliant exporters are on US demand. “Generally, companies with higher pricing power or margins can more easily pass on tariffs to consumers or absorb these costs. Such quality bias is also recommended due to heightened political uncertainty, potentially causing more equity volatility.”
