The future growth of major Southeast Asian economies will further diverge. A report by DBS, Bain & Company, and Vriens & Partners projects that the six largest Southeast Asian economies will grow at an average annual rate of 4.8% from 2026 to 2035, higher than the 4.1% of the previous decade, but with widening differences in the quality and drivers of growth across countries.
Singapore and Malaysia are expected to benefit from AI and technology investment. Malaysia benefits from the US semiconductor supply chain and Chinese infrastructure investment, while Singapore, with its regional hub status, is expected to attract more investment in AI and advanced manufacturing. US AI giant OpenAI already has operations in Singapore, and Anthropic plans to expand its operations in this Southeast Asian financial center. Vietnam also maintains strong growth.
In contrast, Indonesia, the Philippines, and Thailand face higher downside risks. Thailand faces issues such as population decline, high household debt, and political polarization; Indonesia is hampered by institutional fragility, fiscal spending pressures, and the risk of investment outflows; and the Philippines faces the long-term impact of AI automation on the business process outsourcing (BPO) industry.
