The ASEAN+3 region, which includes 11 ASEAN member states and China, Japan and the Republic of Korea, is better placed than in earlier episodes to navigate an energy shock, the ASEAN+3 Macroeconomic Research Office (AMRO) assessed in its annual flagship report released on April 6.
In its ASEAN+3 Regional Economic Outlook (AREO) 2026, AMRO projected regional growth of 4.0% in both 2026 and 2027.
AMRO Chief Economist Dong He said that the region entered 2026 from a position of strength, but the Middle East conflict has shifted the balance of risks to the downside. However, it is better positioned to navigate an energy shock, as its economies are more energy-efficient and less oil-dependent, entered this period with low inflation, and most retain meaningful policy space to respond.
The region expanded by 4.3% in 2025, well above the 3.8% projected in the immediate aftermath of the April 2025 tariff shock. Economic activity remained supported by firm domestic demand, robust exports, boosted by AI-driven semiconductor demand, sustained investment, and strengthening intraregional economic linkages.
Amid higher global energy prices, AREO 2026 forecasts headline inflation to rise from 0.9% in 2025 to 1.4% in 2026 and 1.5% in 2027.
Dong He stressed that as the global economy is battered by one shock after another, preserving policy flexibility is critical to preventing worse outcomes such as stagflation.
Central banks should maintain orderly market conditions and financial stability, and act decisively should supply shocks lead to sustained inflation. On the fiscal side, governments should prioritise targeted support for vulnerable groups, while avoiding broad-based measures that could fuel inflation or undermine fiscal sustainability, he advised.
The report also highlights a fundamental structural transformation underpinning the region’s resilience. Over the past two decades, ASEAN+3 has become more regionally anchored, with denser and more interconnected production networks and a decisive shift toward intraregional sources of demand. The share of the region’s value-added exports to the US has declined from about one-third to 20%, while the share absorbed within the region has risen to nearly 30%.
ASEAN+3 is now the world’s largest market, accounting for 28% of global final demand.
