The Philippines is projected to be the second-fastest growing economy in the Association of Southeast Asian Nations (ASEAN) region in 2025.
The ASEAN+3 Macroeconomic Research Office (AMRO) released its ASEAN+3 Financial Stability Report (AFSR) 2025 and the ASEAN+3 Regional Economic Outlook (AREO) October Update on Thursday, underscoring the broad resilience of the ASEAN+3 region despite heightened uncertainties from US trade policy shifts and geopolitical tensions.
It forecasts a 5.6-percent gross domestic product (GDP) growth for the Philippines in 2025 and 5.5 percent in 2026. This year, only Vietnam is projected to grow faster at 7.5 percent.
Indonesia is forecast to grow 5.0 percent in 2025; Cambodia, 4.9 percent; Lao, 4.4 percent; Malaysia, 4.3 percent; Singapore, 2.6 percent; Thailand, 2.2 percent; Brunei Darussalam, 1.2 percent; and Myanmar, -1.0 percent.
China is seen growing 4.8 percent; Hong Kong, 2.4 percent; Japan, 1.0 percent; and Korea, 0.9 percent.
Growth in the ASEAN+3 region is forecast at 4.1 percent in 2025 and 3.8 percent in 2026, an upward revision from its July projection.
This stronger outlook is underpinned by robust performance in the first half of the year and stronger-than-expected export momentum. Market pressures, which spiked in April following the announcement of “Liberation Day” tariffs, have since gradually eased.
“While intra-regional trade and domestic demand have become increasingly important growth drivers across ASEAN+3, the region remains deeply connected to the global financial system and is therefore not insulated from global shocks,” said AMRO chief economist Dong He.
“Overall, the region’s financial system remains resilient, although pockets of vulnerabilities persist,” said He.
Export-oriented corporate sectors, particularly smaller firms with significant exposure to US demand, may face pressure on profit margins amid shifting trade dynamics.
AMRO said persistent inflation pressures in the US, potentially fueled by higher import tariffs, could complicate the Federal Reserve’s monetary policy stance and trigger spillovers globally. Furthermore, growing uncertainty surrounding the U.S. dollar’s safe-haven status could further fragment the global financial landscape, it said.
Inflation rate in the Philippines is forecast to reach 1.8 percent in 2025 and 3.2 percent in 2026. This is in line with the ASEAN average of 2.5 percent in 2025 and 2.8 percent in 2026.
Despite these challenges, ASEAN+3 economies are well-positioned to navigate global headwinds, AMRO said.
It said strong fundamentals, including robust banking systems, deepening financial markets, ample foreign reserves and available policy space, along with well-calibrated policy mixes, have provided critical buffers. With inflation largely subdued and expectations well-anchored in most economies, central banks can maintain accommodative monetary policy to support growth.
Macroprudential tools, along with foreign exchange and capital flow management measures, offer additional safeguards to maintain financial stability and mitigate external spillovers.
However, AMRO stressed that support should be carefully targeted to vulnerable sectors and deployed prudently to preserve policy space amid elevated external uncertainty.
Beyond near-term risks, the region is undergoing deeper structural transitions, most notably the rapid digitalization of financial services. This shift presents opportunities for greater financial inclusion and efficiency while also introducing new challenges to financial stability.
“Digitalization of the banking sector is reshaping the market structure, offering new pathways for inclusion and efficiency,” said AMRO group head for financial surveillance Runchana Pongsaparn.
“But it also alters the nature and distribution of financial stability risks. Policymakers must adopt a multi-pronged strategy that promotes innovation while managing risks, calibrated to the maturity of each market segment,” said Pongsaparn.
As ASEAN+3 manages near-term uncertainties, AMRO cites the importance of reinforcing policy frameworks, improving transparency and deepening domestic markets and buffers to mitigate spillover risks from external shocks.
He said that “with coordinated actions and deeper financial cooperation and integration, ASEAN+3 can turn today’s challenges into tomorrow’s opportunities, and emerge stronger, more connected, and more resilient.”
