(Bangkok, 19th Comprehensive Report) Major ASEAN economies benefited from exporters rushing to ship goods before the increase in US tariffs, boosting economic growth in the second quarter this year. However, the economic outlook is expected to worsen in the coming months, and some countries' central banks have already started cutting interest rates to stimulate economic growth.
According to Nikkei Asia, Indonesia, the largest economy in ASEAN, saw its second quarter economic growth rate rise to 5.12%, up from 4.87% in the first quarter, driven by strong exports and investment. Data from Indonesia's statistics bureau shows that major export products include palm oil, steel, electronic devices, and automobiles.
The second largest economy, Thailand, saw a second quarter growth rate of 2.8%, slightly lower than the first quarter’s 3.2%, but exports surged by 12.2%. Thailand’s manufacturing industry is a key pillar of the economy, and exports account for 60% of its gross domestic product (GDP).
Thailand’s National Economic and Social Development Council (NESDC) stated in a release that the second quarter’s economic growth exceeded expectations, but the growth momentum for the remainder of the year may slow. Thailand’s economy grew 3% in the first half, and NESDC now forecasts annual growth of 1.8% to 2.3%, slightly higher than the 1.3% to 2.3% forecast in May.
NESDC Chairman Danucha said at a press conference: “We expect economic growth will slow significantly after the export boom.” He added that a decline in inbound tourists and household debt are also putting substantial pressure on the economy.
Many ASEAN countries saw export growth in the second quarter, mainly due to a “shipping rush.” US President Trump announced in April to impose high reciprocal tariffs, triggering market panic, and many exporters rushed to ship goods during the tariff suspension window.
After months of negotiations, US tariff rates on Vietnam are currently set at 20%, and at 19% for Thailand, Indonesia, Malaysia, and the Philippines.
Singapore's economic growth in the second quarter was 4.4%, faster than the first quarter’s 4.1%, but the Ministry of Trade and Industry warned that major global uncertainties remain. Singapore has raised its full-year economic growth forecast to 1.5% to 2.5%, higher than the 0% to 2% forecast in April, but still below the earlier expected 1% to 3%.
Malaysia’s second quarter economic growth remained at 4.4%, the same as the first quarter, mainly benefiting from a good labor market, increased household spending, sustained export demand, and strong tourism and investment activity.
The Philippines’ economy grew by 5.5% in the second quarter, up from 5.4% in the previous quarter. Vietnam performed the best, with a second quarter growth rate of 7.96%.
The central banks of Indonesia, Malaysia, and Thailand have recently cut interest rates to support economic growth in the second half of the year. All three have eased monetary policy and lowered benchmark interest rates to support household consumption and stimulate demand.
According to analysts, US tariffs in the latter half of the year will drive up export costs and erode the competitive advantage of export-dependent ASEAN countries, which may suppress economic growth. An analyst from Kasikorn Research Center said: “ASEAN countries ultimately reached an agreement with the US to set tariffs at 19% to 20%, but the condition is that they must import large amounts of US goods at zero tariffs. This could pose a new threat to the still-vulnerable ASEAN economies.”