Doha, May 30 (QNA) - Qatar National Bank (QNB) expects the economies of the ASEAN-6 group to continue expanding at rates well above the global average, supported by favorable demographics, resilient domestic consumption, deeper regional integration, and an accelerating investment cycle in technology and digital capabilities.

In its weekly report, QNB identified a prolonged US-Israel-Iran conflict as the most significant downside risk to the region's outlook. Such a scenario, the bank said, could lead to persistently higher energy costs, weaker consumer confidence, and disruptions to supply chains that underpin ASEAN's manufacturing base. Nevertheless, ASEAN economies are expected to maintain relatively strong fundamentals in 2026 despite an increasingly challenging global environment.

The report noted that Southeast Asia has been among the world's most dynamic economic regions over recent decades, consistently delivering some of the strongest growth rates globally. Within the region, the six largest members of the Association of Southeast Asian Nations (ASEAN) - Indonesia, Thailand, Singapore, Malaysia, Vietnam, and the Philippines - have ranked among the world's fastest-growing economies, with Singapore having already attained advanced-economy status.

According to QNB, the ASEAN-6 entered 2026 on a solid footing after delivering stronger-than-expected growth in 2025 despite significant shifts in global trade policies.

Growth performance across the bloc was broad-based. Vietnam recorded an exceptional expansion of 8 percent in 2025, its second-highest annual growth rate since 2011, driven by robust manufacturing activity, a strong tourism recovery, export growth, and sustained foreign direct investment inflows.

Indonesia's economy expanded by 5.1 percent, supported by resilient domestic demand, while Malaysia posted growth of 5.2 percent, underpinned by substantial digital-sector investments and strong export momentum.

Singapore benefited from rising global investment in artificial intelligence-related infrastructure and increased spending on large-scale infrastructure projects. The Philippines maintained solid growth, while Thailand continued to face structural challenges, including elevated household debt levels.

The report noted that inflation remained subdued across the ASEAN-6 in 2025, staying well below the region's long-term average and preserving significant policy space for both monetary and fiscal authorities.

The region has also witnessed a gradual shift toward stronger intra-regional demand. Robust foreign direct investment inflows into advanced electronics, electric vehicles, and digital services have significantly reduced the region's vulnerability to external shocks, providing an important buffer against an increasingly difficult global backdrop.

QNB identified an energy shock stemming from a US-Israel conflict with Iran and the effective closure of the Strait of Hormuz as the most immediate threat to the region's outlook. The waterway normally handles around 20 percent of global oil and liquefied natural gas supplies and approximately 85 percent of Asia's total energy imports. Elevated energy prices would increase production costs and consumer prices across the region, adding upward pressure on inflation.

The second major challenge stems from US trade policy. Although the region has structurally reduced its direct dependence on exports to the United States, with US-bound value-added exports declining from roughly one-third to around 20 percent of total exports, ASEAN economies have benefited from the relocation of supply chains away from China. However, US investigations into excess industrial capacity among trading partners, including Indonesia, Malaysia, Thailand, and Vietnam, have introduced additional uncertainty, particularly for Vietnam and Malaysia, which are viewed as potential transshipment hubs for Chinese exports.

A third headwind is slowing demand from China, a key market for a substantial share of ASEAN's industrial output. Taken together, these factors are expected to result in a broad-based moderation in growth, with Southeast Asian economies projected to expand by 4.2 percent in 2026, down from 5.0 percent in 2025.

QNB concluded that despite the anticipated slowdown, growth prospects are likely to vary considerably across ASEAN economies due to differences in economic structures, domestic demand dynamics, energy import dependence, and exposure to external trade shocks. Among the group, Vietnam and Indonesia are expected to remain the most resilient performers. (QNA)