Southeast Asia will rise as a global “middle power” of the world in the coming five years, according to a prediction by Kearney’s Global Business Policy Council report titled “World in Flux: Global Wildcards 2025–2030”.
Southeast Asia’s economies, including Indonesia and Vietnam, are positioned to serve as critical production hubs and trade bridges amid US-China tensions, the report continues. The region’s ability to attract investment while navigating complex geopolitical dynamics is reshaping global economic flows.
Businesses are expected to expand operations into the Global South, harness opportunities present with its young and dynamic workforce, and extend supply chain diversification strategies beyond traditional manufacturing hubs in Asia.
However, while some Southeast Asian nations were able to boost exports on the sidelines of the US-China trade wars, the long term effects of tariffs on consumers and businesses, the environment, and the world’s poorest countries, among others, will likely be adverse, Kearney notes.
On technology, digitalisation and sustainability, Kearney’s report highlights that the rapid technological adoption and AI advancements are contributing to surging electricity demand across the region.
“Governments and businesses must work together to build resilient and sustainable energy infrastructure,” it says.
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Digital tools, including deepfakes, are amplifying corruption risks, and addressing these challenges requires public-private collaboration to foster trust and transparency, particularly in sectors like critical minerals.
Finally, Southeast Asia will see an era of “super-empowered individuals”, where influencers and innovators are leveraging digital platforms to mobilize social, environmental, and economic change. This creates both opportunities and challenges for businesses including industry disruptions and CSR/ESG action.
Kearney’s managing partner for Southeast Asia, Varun Arora says that Southeast Asia is poised for transformation, but this journey is not without challenges. The region is reaping benefits from the global reset of manufacturing footprints and supply chains, but will be impacted by the rising tariffs.
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AI advancements could lift gross domestic product (GDP) across Southeast Asia by 10% to 18% by 2030 - nearly US$1 trillion — bringing unprecedented opportunities, but the region is not yet ready to meet the surging power demands this growth entails, he says.
“Overall, Southeast Asia stands as a crucible of both opportunity and challenge,” says Arora. “To thrive in this environment, businesses must think boldly, invest sustainably, and leverage the region’s unique strengths to unlock opportunities.
