SINGAPORE — Southeast Asia’s largest economies are expected to maintain steady economic expansion in 2026, with the six core members of the Association of Southeast Asian Nations projected to grow about 4.9 percent, according to a new forecast from the Swiss investment bank UBS.
The outlook reflects the region’s increasing importance in global supply chains and its resilience amid a shifting international economy, where companies and investors are diversifying production and capital flows across Asia.
Domestic Demand and Supply Chains Drive Momentum
Economists at UBS said Southeast Asia continues to benefit from deep integration into global manufacturing value chains and large domestic consumer markets, two factors that have helped insulate the region from broader global volatility.
Grace Lim, senior ASEAN economist at UBS Investment Bank Global Research, noted that several countries in the bloc are entering 2026 with strong economic drivers already in place.
- Indonesia is seeing robust household consumption.
- Thailand and the Philippines are experiencing a rebound in private investment.
- Singapore and Malaysia remain competitive in technology-related exports and advanced manufacturing.
Taken together, these dynamics have sustained growth even as global trade and monetary conditions fluctuate.
The forecast was presented during the 14th UBS OneASEAN Summit in Singapore, which gathered more than 850 institutional investors, policymakers and corporate leaders to assess investment opportunities and the global economic outlook for the coming year.
Indonesia Leads with Strong Domestic Demand
Indonesia, Southeast Asia’s largest economy, has emerged as a central pillar of regional growth.
According to UBS, the country recently recorded 5.11 percent GDP growth, surpassing the 5 percent threshold for the first time since 2022. The expansion was driven by broad domestic demand, including household consumption growth of 5.1 percent year-on-year and investment rising 6.1 percent.
UBS expects Indonesia’s growth to strengthen further to around 5.2 percent in 2026, close to the government’s target range of 5.4 to 5.6 percent.
Southeast Asia as an Investor Alternative
Banking executives and economists at the summit emphasized that Southeast Asia is increasingly viewed as a strategic alternative for global investors, particularly as companies seek to diversify production away from concentrated supply chains.
Nicolo Magni, UBS’s head of Global Banking for Southeast Asia and South Asia, said deal-making activity across the region is expected to remain strong in 2026.
Capital markets activity, he said, is likely to expand particularly in health care, real estate and consumer sectors, reflecting rising incomes and rapid urbanization across the region.
Global Context: Resilient Growth Amid Uncertainty
The region’s outlook comes as the global economy shows signs of resilience despite persistent geopolitical tensions and shifting trade policies.
The International Monetary Fund forecasts global economic growth of about 3.3 percent in 2026, supported partly by rising investment in technology and artificial intelligence.
Within Asia, Southeast Asia remains one of the most attractive destinations for foreign investment, with countries such as Indonesia, Malaysia and Vietnam benefiting from supply-chain diversification and expanding manufacturing capacity.
Still, economists warn that risks remain, including slower global trade growth, geopolitical tensions and potential disruptions linked to tariffs or financial market volatility.
A Region of Diverging but Resilient Economies
The “ASEAN-6” — Indonesia, Malaysia, the Philippines, Singapore, Thailand and Brunei — represent the region’s most advanced economies and form the core of Southeast Asia’s economic engine.
Beyond them, the broader ASEAN grouping also includes Cambodia, Laos, Myanmar, Vietnam and the bloc’s newest member, Timor-Leste.
Collectively, the region’s nearly 700 million people and rapidly expanding middle class continue to underpin one of the world’s most dynamic economic zones.
For investors and policymakers gathered in Singapore, the message was clear: despite global uncertainty, Southeast Asia’s growth story remains intact — driven by consumption, investment and a pivotal role in the world’s manufacturing and technology supply chains.