Southeast Asia’s major economies are preparing for a slowdown in the second half of 2025, following a temporary boost in growth driven by the “front-loading” of exports before higher U.S. tariffs took effect. Analysts warn that the tariff-induced surge, which lifted regional GDP in the second quarter, is unlikely to be sustained in the coming months.
Thailand’s GDP grew 2.8% year-on-year in the April-June quarter, down from a revised 3.2% in the previous quarter, according to the National Economic and Social Development Council (NESDC). Exports, which make up around 60% of the economy, rose 12.2% during the quarter, largely due to shipments accelerated ahead of the U.S. tariff changes. The NESDC now projects full-year growth of 1.8% to 2.3%, slightly higher than its May forecast, but signaling weaker performance in the latter half of 2025.
“Thai exports are expected to face mounting headwinds in the second half,” NESDC Secretary-General Danucha Pichayanan told reporters, citing both higher U.S. tariffs and a broader global slowdown. Tourism is also under pressure, with annual visitor arrivals forecast at 33 million, below earlier expectations of 35 million.
Vietnam posted the fastest growth among the region’s six largest economies, with GDP expanding 7.96% in the second quarter, supported by robust exports. Indonesia, Southeast Asia’s largest economy, grew 5.12%, up from 4.87% in the previous quarter, with exports and investment driving the expansion. However, some economists expressed skepticism over the stronger-than-expected figures.
Singapore’s economy rose 4.4% in the April-June period, up from 4.1% in the first quarter, reflecting a temporary boost from tariff front-loading. The Ministry of Trade and Industry warned that the effect would fade in the second half, with continued uncertainties from U.S. trade policies, including potential sectoral tariffs on pharmaceuticals and semiconductors. Singapore raised its 2025 growth forecast to 1.5%-2.5%, compared with an earlier estimate of 0%-2%.
Malaysia and the Philippines reported more modest gains. Malaysia’s GDP grew 4.4%, supported by domestic consumption, manufacturing, and tourism, but its central bank trimmed full-year growth expectations to 4%-4.8%. The Philippines expanded 5.5%, slightly above the previous quarter.
To counter slowing growth, some central banks in the region have eased monetary policy. Bank Indonesia cut its benchmark rate by 25 basis points to 5.25%, while Bank Negara Malaysia lowered its rate to 2.75%. The Bank of Thailand also reduced its rate to 1.5%. Gareth Leather, Senior Asia Economist at Capital Economics, said further easing is likely as growth slows amid falling Chinese tourist arrivals and the fading tariff boost.
After prolonged negotiations, U.S. tariffs are now set at 20% for Vietnam and 19% for Thailand, Indonesia, Malaysia, and the Philippines. Analysts warn that these tariffs could dampen ASEAN export competitiveness, pushing costs higher and challenging fragile economies.
“ASEAN countries finally secured lower tariffs, but only if they import substantial goods from the U.S. at zero tariff,” a Kasikorn Research Center analyst told Nikkei. “This could create new pressures for economies that remain vulnerable.”
