Investing.com — ASEAN economies enter 2025 with a strong starting position for growth, Bank of America analysts said in a note, citing resilient domestic activity, improving labor markets, rising exports and a rebound in tourism.
But the brokerage noted that risks from US-related trade disruptions remain a major point of uncertainty, as President-elect Donald Trump prepares to impose more trade tariffs. This is expected to affect export-dependent economies in the region.
However, Bank of America expects average GDP growth to remain largely stable in 2025, at about 4.9% year-on-year, the same level as 2024.
ASEAN consists of 10 member states, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – which make up the bulk of the bloc's economic power.
Among these factors, Bank of America expects Vietnam's economy to grow the most in the first half of 2025, with GDP at 6.8%, compared to a 7% increase in 2024.
Indonesia – the bloc's largest economy – is expected to see GDP growth of 5.3% by mid-2025, up from 5.0% last year, while Singapore is expected to lag behind its regional peers at 2.6%, compared to 3.8% in 2024.
Growth across the region is expected to depend on a healthy job market, while a recovery in tourism is also expected to help, Bank of America analysts said.
Steady lower inflation represents a brighter outlook for ASEAN economies, with price pressures easing across the region amid higher interest rates in 2024.
On the other hand, a weaker monetary easing cycle in the region may hamper growth. Regional central banks are expected to be more reluctant to cut interest rates due to the Federal Reserve's slowing plans to cut interest rates.
Trade tensions in the US represent the biggest growth risk
Bank of America analysts said the biggest source of uncertainty for ASEAN comes from the possibility of increased US trade tariffs, as well as the escalating trade war between the US and China.
The region is highly exposed to trade with both countries, making the risk of spillover high.
Global trade tariffs in the United States are likely to have a significant impact on the region, as will increasing pressure on the Chinese economy.
Bank of America said Vietnam and Malaysia are most exposed to trade headwinds, while Thailand and Singapore will see a moderate impact.
Indonesia and the Philippines will see a relatively less severe impact, due to their locally oriented economies.
