ASEAN+3 Growth Holds Steady at 4.1% Amid Energy Shock and AI Drive, AMRO Reports

SINGAPORE, October 5, 2026 – AMRO has released its ASEAN+3 Financial Stability Report (AFSR) 2026 and the ASEAN+3 Regional Economic Outlook (AREO) October Update, underscoring the region’s sustained performance even as it contends with an energy shock stemming from the Middle East.

Regional growth is forecast to remain at 4.1 percent for both 2026 and 2027, with inflation projected at 1.6 and 1.7 percent respectively. The 2026 projections match July estimates, while the 2027 outlook was revised upward by 0.1 percentage point. This adjustment reflects stronger AI-related exports and investment supporting growth, countered by elevated energy costs and El Niño-induced food price pressures that lift inflation.

Regional Financial Systems Remain Resilient Amid Heightened Global Risks

The global macro-financial backdrop has been defined by enthusiasm surrounding artificial intelligence (AI) and escalating geopolitical friction from the Middle East conflict. Shipping interruptions in the Strait of Hormuz have driven up energy prices and rekindled global inflation worries.

“The AI investment cycle is supporting a widening range of regional activities, although domestic demand remains uneven,” said AMRO Chief Economist Dong He. “Disruptions to energy supplies and industrial inputs proved less severe than many had feared, limiting the drag on production. However, higher energy and logistics costs continued to weigh on household purchasing power and business costs.”

Despite external headwinds and rising dollar interest rates, ASEAN+3 economies have demonstrated resilience. Market adjustments have been orderly, though reactions have varied across jurisdictions, reflecting differences in exposure to external shocks, domestic fundamentals, and policy responses. Even as global shocks continue to affect regional markets during acute stress, ASEAN+3 financial conditions have become less synchronized with the global financial cycle.

Most regional economies retain sound external positions and adequate foreign exchange reserves. The banking system remains well-capitalized, liquid, and profitable. Corporate and household debt-to-GDP ratios have generally declined, while public debt-to-GDP has broadly stabilized. Nevertheless, pockets of domestic vulnerabilities warrant continued vigilance.

Financial Stability Risks Are Becoming More Interconnected

Looking ahead, the growth outlook remains particularly sensitive to AI-related demand, which could either strengthen or weaken exports and investment. Additional downside risks include renewed Middle East energy disruptions and a more persistent El Niño, alongside financial-market volatility and further protectionist measures.

AMRO warns that the region’s financial risks are becoming increasingly complex and interconnected. A sharp repricing of AI-related assets could trigger broader market corrections, forced deleveraging, and tighter credit conditions. Abrupt US dollar movements could quickly transmit to ASEAN+3 economies through exchange rates, capital flows, asset prices, and funding costs.

While the growth of nonbank financial institutions (NBFIs) can broaden and diversify financing sources, rising leverage, liquidity mismatches, and interconnectedness with banks and financial markets can amplify stress. Digital finance presents additional challenges, including risks from foreign-currency-denominated stablecoins, cyberattacks, and digital fraud.

Stronger Buffers and Deeper Regional Integration

To mitigate these vulnerabilities, the region should maintain robust macro-financial buffers through credible policy frameworks, adequate foreign exchange reserves, and deeper local currency markets. Surveillance should adopt a system-wide perspective encompassing NBFIs and cross-sector interlinkages, while integrating digital finance risks and operational resilience against cyberattacks and fraud.

Dong He added: “Regional integration is itself a source of resilience. By strengthening policy dialogue and cooperation and deepening financial linkages, ASEAN+3 economies can better withstand external shocks and prepare for future risks.”

Regional cooperation must keep pace with the shifting global environment by upgrading information sharing, crisis preparedness, and operationally ready financial safety nets. Advancing regional financial integration—particularly through carefully designed digital connectivity—will help mobilize the region’s savings, diversify financing sources, and enhance cross-border risk-sharing.

“Technology alone cannot deliver meaningful financial market integration, but digital financial platforms can facilitate the process by easing market access, strengthening regulatory compliance, and improving efficiency,” added Runchana Pongsaparn, AMRO Group Head for Financial Surveillance.

About AMRO

AMRO is an international organization established to support macroeconomic resilience and financial stability of the ASEAN+3 region, comprising members of the Association of Southeast Asia Nations (ASEAN) and China; Hong Kong, China; Japan; and Korea. AMRO’s mandate is to conduct macroeconomic surveillance, support regional financial arrangements, and provide technical assistance to the members. AMRO also serves as a regional knowledge hub and provides support to ASEAN+3 financial cooperation.

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