Singapore, Thailand may see negative growth by 2026 as Asean reels from tariffs: economists
Bloomberg Economics projected on Tuesday (Jun 17) that gross domestic product growth across the Asean-5 economies – Singapore, Malaysia, the Philippines, Vietnam and Indonesia – is expected to fall from 4.5 per cent in 2024 to 3 per cent in 2025.
The research unit added that growth could even fade to 1.5 per cent in 2026 if the tariffs stay in place.
Among the five, Thailand and Singapore are likely to be hit the hardest because of their exposure to global trade, said Bloomberg's senior economist for South-east Asia Tamara Henderson.
Thailand, the exports of which account for nearly 70 per cent of GDP, faces potential tariffs as high as 36 per cent. She warned that the country's growth is likely to slip below 2 per cent in 2025, and may contract outright in 2026 if the tariffs remain.
'Over 11 per cent of Thailand's GDP comes from merchandise exports to the US, particularly in electronics and chips,' she noted. 'Auto-supply chains are also affected, and tourism recovery has faltered.'
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
Although Singapore faces the minimum 10 per cent baseline tariff, it is arguably the most exposed in the region because of its export-oriented economy.
About 6 per cent of its GDP depends on exports to the US, with significant trade in semiconductors and pharmaceuticals, for which the likelihood of additional duties remains unclear.
This could drag Singapore's 2025 growth sharply below the strong 4.4 per cent recorded in 2024. If the tariffs remain in force, Singapore's economy could contract by around 1 per cent in 2026, Henderson projected.
'Singapore is likely to take the largest hit to growth in the near-term from the tariff shock. However, its agile and well-resourced government may allow the city-state to emerge with less scarring over the medium term,' she added.
Economies such as the Philippines and Indonesia are expected to weather the tariff storm better, given that their growth is more led by domestic demand. In Indonesia, US-bound shipments account for only around 10 per cent of exports.
'Exports in Indonesia are about 25 per cent of overall GDP, compared to household spending, which makes up around 50 per cent,' said Henderson.
Likewise, the Philippines' tight labour market and strong household sector are likely to support domestic spending, shielding the country from heavy tariff shocks.
She noted, however, that the tariffs could hit both economies in areas beyond trade, given that weak global demand and weaker pricing power along supply chains could dampen the region's investment and hiring opportunities.
Balancing acts
Heavy US tariffs on South-east Asian economies mean that the region's attractiveness as an alternative 'China-plus-one' destination is slowly fading.
Asean countries must therefore find new opportunities to remain resilient, said Priyanka Kishore, lead economist at the policy consultancy Asia Decoded; she was speaking at the launch of a report on the region's economic outlook by the Institute of Chartered Accountants in England and Wales on Jun 12.
China's role in the changing global order will be difficult to navigate, she said, because its improvements in manufacturing could be damaging to the region's economies, even as it offers an alternative trade destination to the US.
She noted that the region's labour productivity has lagged at half the pace of China's in recent years. 'China is capital-intensive and mechanised; it is producing items at a fraction of the cost of that in a factory in Indonesia.
'Regional cooperation will have to include reform in infrastructure and human capital development, such as training of skills and digitalisation,' she said.
Henderson added that Asean's resilience will depend on identifying new competitive niches.
'Finding these gaps will be the challenge. Perhaps, these will be in services. Countries such as Singapore, with its many Mandarin speakers, could see an advantage in its ability to understand both the West and China,' she suggested.
But China's place in the Asean story is not entirely damaging, analysts say. The Chinese government's efforts to boost its ailing economy have been widespread, and aimed at making domestic demand the main engine and anchor of its economic growth.
If successful, a wealthier Chinese middle class could spark opportunities in trade and investment for certain sectors in the region.
Gary Tan, portfolio manager at Allspring Global Investments, said: 'These include tourism, logistics and e-commerce; regional hubs like Singapore could see increased cross-border activity.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
31 minutes ago
- Business Times
Hong Kong May retail sales increase 2.4%
[HONG KONG] Hong Kong's retail sales by value rose 2.4 per cent in May from a year earlier, the first increase in more than a year, government data showed on Wednesday (Jul 2). Sales increased to HK$31.3 billion (S$5.1 billion), the first expansion since February 2024. In April, retail sales fell 2.3 per cent compared with the same month a year before. In volume terms, May retail sales increased 1.9 per cent from a year earlier, compared with a revised 3.3 per cent decline in April. May visitor arrivals rose to 4.08 million, up 20 per cent from the same month a year ago, data from the Hong Kong Tourism Board showed. That compared with 3.85 million in April, 3.82 million in March and 3.67 million in February. The number of mainland Chinese visitors stood at 3.12 million in May, up 19 per cent from a year ago. That compares with 2.81 million in April, 2.75 million in March and 2.77 million in February. However, many visitors from mainland China are visiting only for a day and keeping a tight rein on spending. At the same time, local residents are spending more across the border, taking advantage of the Hong Kong US dollar's relative strength against the Chinese yuan. 'While the retail sector continues to adapt to the changes in consumption patterns, the government's proactive efforts in promoting tourism and mega events, in tandem with the increase in employment earnings and sustained steady growth of the mainland economy, will help bolster consumption sentiment and support the consumption market,' a spokesman for Hong Kong's government said. Sales of jewellery, watches, clocks and valuable gifts fell 3.2 per cent year on year in May after a 1.7 per cent drop in April. Sales of clothing, footwear and allied products climbed 0.3 per cent year on year in May after a 5.5 per cent decline in April. REUTERS
Straits Times
an hour ago
- Straits Times
Granddaughter of Hin Leong founder O.K. Lim fails to keep 3 insurance policies from creditors' reach
Sign up now: Get ST's newsletters delivered to your inbox The three policies are part of a set of eight insurance policies with AIA that Mr Lim Chee Meng had taken out when Ms Lim was a minor. SINGAPORE – The daughter of bankrupt former Hin Leong Trading director Lim Chee Meng failed in a bid to shield three AIA Singapore insurance policies worth over half a million dollars from being part of Mr Lim's bankruptcy estate. Ms Michelle Lim Yan Yi, the granddaughter of Hin Leong founder Lim Oon Kuin sought a High Court declaration that the three policies, worth over $521,000, should be ring-fenced from creditors' reach because they were held on trust for her benefit by her father, who was declared bankrupt in December 2024. The three policies are part of a set of eight insurance policies with AIA that Mr Lim Chee Meng had taken out when Ms Lim was a minor, under which he was the policy owner and she was the named insured. But High Court Judicial Commissioner Mohamed Faizal found there was a lack of evidence of an intention on Mr Lim Chee Meng's part, prior to his bankruptcy, to create a trust over the three policies for the sole benefit of his daughter. He found that the documentary evidence relied on by Ms Lim were 'either self-interested representations' or 'mere assertions'. One document she relied on was an October 2021 letter from Mr Lim Chee Meng to ring-fence the eight policies from other assets that were subjected to a freezing order in a US$3.5 billion civil suit. Another document adduced was an AIA letter dated October 2021 signed by a purported personal wealth manager, who asserted that 'the eight policies belong to (Ms Lim), and are being held by Mr Lim Chee Meng on trust for (Ms Lim)'. Top stories Swipe. Select. Stay informed. Singapore Singapore and Cambodia to expand collaboration in renewable energy, carbon markets and agri-trade Singapore Ong Beng Seng's court hearing rescheduled one day before he was expected to plead guilty Singapore Three hair salons raided in clampdown on touting, vice, drugs in Geylang and Joo Chiat Singapore The romance continues: Former 'Singapore girl', 77, returns to Osaka Expo after 55 years Singapore GrabCab, Singapore's newest taxi operator, hits the roads with over 40 cabs to be rolled out in July Singapore Police looking into claim by driver who caused teen's death that he was an NUS student Singapore Man on trial for raping drunken woman after offering to drive her and her friend home Singapore 3 weeks' jail for man who touched himself on train, flicked bodily fluid on female passenger Ms Lim contended that the AIA letter would not have been issued unless her father had clearly conveyed his intention to create a trust. But the judge found 'the letter was bare and bereft of details and merely asserted, without more, that the eight policies were held on trust.' Other documents Ms Lim relied on included an e-mail dated March 10, 2025, from Mr Lim Chee Meng to the trustees and part of his affidavit filed in 2024 for his bankruptcy proceedings, in which he asserted that he held the eight policies on trust for Ms Lim. But the judicial commissioner pointed out that most of the documents she relied on as evidence were written by or on behalf of her father after his bankruptcy proceedings started. 'By that time, it would have been apparent that Hin Leong's collapse could have extremely far-reaching financial consequences for all concerned, not least Mr Lim who was a director. 'It was at this point that Mr Lim started to insist that the eight policies were in fact not owned by him and should be deemed to be held on trust,' the judicial commissioner noted. 'The courts should be wary of such belated attempts by bankrupts to shield assets from creditors by retrospectively asserting the existence of trust arrangements without contemporaneous evidence,' he pointed out. Mr Lim Chee Meng, along with his father and sister Lim Huey Ching were declared bankrupt in December 2024 following a settlement of two lawsuits brought by Hin Leong's liquidators and HSBC against the Lim family. Their bankruptcy estates are being managed by trustees Leow Quek Shiong and Seah Roh Lin of BDO Singapore, who have taken the position that the three insurance policies vest in Mr Lim Chee Meng's bankruptcy estate. The trustees had asked Mr Lim Chee Meng and Ms Lim whether a third party would pay the bankruptcy estate the surrender value of the three policies, which was worth over $521,000 as at Jan 16, 2025. If no third party would pay for them, the trustees would then terminate the policies and use the proceeds to pay his creditors. But Mr Lim Chee Meng and his daughter did not agree to this arrangement. Ms Lim claimed that her father intended to hold these policies on trust for her until she turned 21 years old, after which he would transfer the policies to her name. But the trustees contend that while the policy documents do identify Ms Lim as the insured, they do not name her as a beneficiary. The trustees also pointed out that Mr Lim Chee Meng's actions were 'inconsistent with any intention to create a trust for Ms Lim since he did not take the necessary steps to vest the three policies in her name when she turned 21', despite having the opportunity to do so. The trustees noted that AIA had written to Mr Lim on June 13, 2024, to indicate that its records showed he wished to remain the policies' owner when Ms Lim turned 21, but they were writing to him just in case he wished to change the state of affairs. The judicial commissioner noted that Mr Lim Chee Meng 'chose to ignore the (AIA) letters altogether'. Further, he also did not file any affidavit to support his daughter's case. 'While I accept that, the absence of direct evidence from Mr Lim is not determinative, such absence necessarily raises obvious and legitimate questions about the credibility and completeness of (Ms Lim's) claim,' the judicial commissioner noted. .
CNA
2 hours ago
- CNA
'A taste of China': Luckin Coffee's US debut draws cheers from Chinese media and consumers
BEIJING/WASHINGTON: Once dismissed as a cheap imitation of Starbucks, China's Luckin Coffee has not only overtaken its American rival on home turf - it is now expanding into the US, opening its first two stores in New York this week. News of Luckin's US store openings has been met with a wave of congratulatory messages and excitement on Chinese social media, with many celebrating the company's global expansion against the backdrop of the US-China tariff war. 'This is great. Luckin has gone (truly) global,' wrote a user by the handle Coffee Yi on the popular Sina Weibo microblogging site. 'Americans are going to pay (what we pay) in yuan for good coffee,' said another. On Instagram, users and influencers showed off free Luckin tote bags which were given out to promote the launch of its New York City storefronts and drinks that were priced as low as 99 cents. 'I love their iced coconut coffee and velvet latte drinks,' said a customer who visited a newly-opened Luckin branch on Sixth Avenue. 'Please open a store in California and bring your global ambassador Liu Yifei,' said another customer, referring to the Wuhan-born Chinese American actress best known for her role in Disney's 2020 live-action film Mulan. BREWING GLOBAL SUCCESS Chinese beverage companies have been having their moment in the spotlight - with Chagee CEO Zhang Junjie recently becoming a billionaire at age 30 after the tea chain successfully went public on the Nasdaq in April and beverage giant Mixue, now the world's largest F&B chain by store count, surpassing McDonald's and Starbucks, seeing success in Hong Kong after it made its IPO debut in March. Luckin first burst onto China's cutthroat coffee scene back in 2017 and industry watchers say young Gen Z customers have been vital to its success - many who flock to stores for a taste of its highly-affordable signature cold foams, brews and lattes. 'The rise of the Chinese coffee industry and Luckin is the result of China's embrace of the world,' wrote Chinese journalist Ding Gang in an opinion piece for state-run outlet Huanqiu, published on Wednesday (Jul 2). 'With flexible category innovation, digital operations and cost-effectiveness, Luckin has cultivated a variety of fresh flavors that suit young Chinese coffee drinkers,' he said. Ding noted that Luckin is one of the biggest buyers of coffee beans from Yunnan, a province in southwest China better known for its Pu'er tea. With a foothold in the US, industry observers will now be watching to see if Luckin's value-focused, app-based approach can win over American coffee drinks. 'The world has never lacked coffee (stores) and brands,' said Ding Gang, adding that the global coffee market would continue to expand. 'Luckin Coffee's (entry into) the US is not to copy Starbucks' strategy but to expand global taste boundaries - with coffee that carries a taste of China's heritage,' he said.
