The Asean+3 Macroeconomic Research Office (AMRO) has kept its 2026 growth forecast for the region unchanged at 4%, even as it raises its inflation projection to 1.8% from 1.4%, citing more prolonged disruptions from the Middle East conflict.
In an interim update to its regional economic outlook released on June 2, AMRO says the region (the Asean economies together with China, Hong Kong, Japan and South Korea) remains resilient, but warns that signs of stress are surfacing as the conflict, which broke out in late February, enters its fourth month, longer than the two months earlier expected.
Crude oil prices have climbed about 50% since the conflict began, and refined products and fertiliser inputs such as urea about 80%, after roughly 80% of vessel transit through the Strait of Hormuz was disrupted. Early strains have surfaced in industrial inputs such as helium, sulphur and fertilisers, though broad-based market dislocations have been avoided.
"Asean+3 growth has remained resilient, supported by firm domestic demand and technology exports. But incipient signs of stress are emerging," says Dong He, AMRO's chief economist. "If the conflict persists, these pressures could broaden and weigh on regional growth."
Growth in 1Q2026 came in at 4.4%, stronger than expected, but AMRO says the full impact has yet to materialise. Forecasts for most Plus-3 economies were upgraded on the back of an AI-driven technology cycle, while growth in some Asean economies, including the Philippines and Vietnam, was downgraded. For Singapore, AMRO keeps its full-year 2026 growth forecast at 3.4% but lifts inflation to 2.5% from 1.8%.
Under an adverse scenario in which Brent crude averages US$125 ($160) a barrel in 2026 (against a baseline of US$95) and supply disruptions worsen, regional growth could slow to 2.5% while inflation could climb to 3.5%. Excluding the pandemic years, that would be the region's highest inflation in over a decade and its slowest growth since the Asian financial crisis.
See also: Qatar says temporary toll at Strait of Hormuz is negotiable
The next update is due in late July.
