Key facts
- ASEAN economies are projected to grow by an average of 4.8% annually from 2026 to 2035.
- Singapore is expected to benefit from technology investments, while Thailand and Indonesia face greater internal risks.
- Singapore absorbed 64.3% of net foreign direct investments into ASEAN's six largest economies in 2025.
- Binding domestic constraints such as power grid instability, tech talent shortages, high household debt, and policy inconsistency are capping growth ceilings in surrounding economies.
- Vietnam leads regional growth projections with a 6.2% baseline forecast.
- Thailand anchors the lower bound at 2.2% average growth.
Southeast Asia's major economies are projected to expand by an average of 4.8% annually over the next decade, but domestic hurdles may prevent most of these member states from converting global investments into broad-based growth, according to a report jointly produced by Bain & Company, DBS Bank and Vriens & Partners. The report, "From Tailwinds to Trade-Offs: Southeast Asia Outlook 2026 – 2035," noted that while the baseline growth forecast of 4.8% for 2026 to 2035 remains resilient, it is a slight decrease from a previous 10-year projection of 5.1%. Singapore absorbed 64.3% of the total net foreign direct investments (FDIs) flowing into ASEAN’s six largest economies in 2025, amounting to US$151 billion. This represents a steady rise from previous five-year periods, indicating Singapore's growing role as the region's central financial clearinghouse. However, surrounding economies are struggling to absorb and deploy these capital flows effectively due to binding domestic constraints such as power grid instability, tech talent shortages, high household debt, and policy inconsistency. These factors are limiting their growth potential. Vietnam leads regional growth projections with a 6.2% baseline forecast, capturing supply chain realignments, though power grid reliability remains a primary constraint. The Philippines follows with a 5.8% forecast, supported by demographics and consumer spending, but faces competition from AI automation in its business process outsourcing sector. Indonesia's baseline growth of 5.4% is anchored by its domestic market and resource downstreaming, but institutional friction and fiscal policy shifts limit its upside. Malaysia is expected to expand by 4.3% due to semiconductor and data center commitments, but faces talent bottlenecks and a concentration in lower-margin assembly operations. Singapore's economy is projected to grow by 2.7% on the back of its hub status and adoption of enterprise AI. Thailand anchors the lower bound at 2.2% average growth, constrained by demographic ageing, high household debt, and political fragmentation.