KUALA LUMPUR: The Asean+3 region is poised for stronger economic growth this year, driven by an insatiable global appetite for artificial intelligence (AI) and semiconductor technology.
In its quarterly Update of the Asean+3 Regional Economic Outlook (AREO), the Asean+3 Macroeconomic Research Office (AMRO) upgraded its 2026 regional growth forecast to 4.1%, up slightly from the 4% projected in June.
Subsequently, growth is expected to moderate slightly to 4% in 2027.
AMRO also delivered a more favorable outlook on consumer prices, downwardly revising its 2026 headline inflation projection to 1.6% from 1.8%, reflecting lower global commodity price assumptions.
According to the report, the upgraded outlook reflects sustained momentum in the region's technology sector, particularly robust demand for semiconductors and other AI-related products, alongside a more favorable global commodity price outlook.
Firm household spending, resilient investment, and robust semiconductor and electronics exports are expected to continue driving growth, while manufacturing activity continues to expand as supply disruptions proved less severe than initially feared.
“Asean+3 has remained resilient, supported by firm domestic demand and its central role in global AI supply chains,” said AMRO Chief Economist Dong He.
“The impact of the Middle East conflict has also been less severe than initially expected, although elevated energy and input costs continue to pose risks to inflation and industrial activity.”
While inflationary pressures have remained broadly contained — with price increases concentrated mainly in energy and transport, and core inflation rising only modestly — AMRO warned that food inflation could rise as higher input costs and adverse weather conditions feed through to prices.
Furthermore, AMRO noted that the outlook remains subject to significant uncertainty. The report outlines that even a moderate slowdown in global technology investment—back to its 2024 pace—could slow Asean+3 growth to 2.5% in 2027.
Excluding the pandemic years, this would mark the region's weakest growth rate since the Asian Financial Crisis. Other risks include a renewed escalation in the Middle East conflict, which could raise energy, shipping, and food costs, alongside financial market volatility and rising trade protectionism.
“The wide range of plausible outcomes underscores the importance of continued vigilance and sound macroeconomic policies,” He added.
“Policymakers will need to respond flexibly to differing domestic conditions and rapidly evolving external risks, particularly the AI cycle and the Middle East conflict.”
AMRO's next regional economic update is scheduled for release on Oct 5, 2026.
