Kuala lumpur: ASEAN needs to deepen regional integration and strengthen intra-regional investment to enhance its economic resilience amid growing global uncertainties, including geopolitical tensions and supply chain disruptions, according to ASEAN+3 Macroeconomic Research Office (AMRO) Group head and lead economist Allen Ng.
According to BERNAMA News Agency, Ng warned that prolonged conflicts, particularly in West Asia, could push inflation higher and weigh on growth across the ASEAN+3 region, with the impact largely dependent on the duration and severity of the crisis. During his presentation at the ASEAN+3 Regional Economic Outlook and Fiscal Policy Report Outreach Seminar, Ng emphasized the necessity for policy readiness and regional cooperation in scenarios of uncontrolled regional escalation, which could lead to significantly higher inflation and further moderated growth.
Ng, a panellist at the seminar, noted that strengthening intra-regional trade and investment linkages has provided an important buffer against external headwinds. He stressed that deeper regional integration would be key to sustaining growth momentum. While most ASEAN+3 economies retain some fiscal and monetary policy space, policymakers must balance preserving flexibility in the near term with responding decisively if economic conditions worsen. Targeted fiscal support and clear monetary policy communication are critical to anchoring inflation expectations.
The economist highlighted low intra-ASEAN investment as a key structural challenge, limiting deeper trade integration within the region. Intra-regional foreign direct investment in ASEAN has remained relatively low and has declined over the past decade, indicating weaker investment integration compared to other regions such as the European Union. Ng suggested that ASEAN must adopt a more coordinated investment strategy, including easing non-tariff barriers, leveraging global value chain linkages, and promoting intra-regional investment to drive productivity and sustainable growth.
According to AMRO's analysis, deeper ASEAN integration could significantly boost intra-regional trade, potentially raising its share to nearly 40 percent by 2050, while creating a more stable and diversified source of growth for the region. The ASEAN+3 economies have entered 2026 from a position of relative strength, underpinned by resilient domestic demand and robust export performance despite earlier external shocks. The region's growth had outperformed initial expectations following the April 2025 tariff shock, with expansion reaching about 4.3 percent in 2025.
However, Ng projected growth across ASEAN+3 to moderate to around 4.0 percent in 2026 and 2027, as external headwinds weigh on the region despite continued resilience in domestic demand. Inflation is projected to trend higher, rising from 0.9 percent in 2025 to about 1.4 percent in 2026 and 1.5 percent in 2027, driven largely by energy-related pressures.
On Malaysia, Ng said growth is expected to ease slightly to 4.6 percent in 2026 before improving to 4.7 percent in 2027, compared with 5.2 percent in 2025, while inflation is projected to rise to around 2.0 percent in both years.
Another AMRO economist, Luke Hong, stated that ASEAN+3 needs to navigate mounting structural pressures while remaining agile in responding to external shocks. Achieving resilient, inclusive, and sustainable growth will require a more comprehensive approach to fiscal policy, anchored on stronger aggregate management, efficient spending, and improved revenue mobilisation. Member authorities should establish credible fiscal anchors and strengthen fiscal rules to ensure medium- to long-term sustainability while maintaining sufficient flexibility to respond to evolving economic conditions. Improving spending efficiency, especially in key sectors such as infrastructure, health, and education, will help maximise the impact of public resources and strengthen overall economic resilience.