Governments in Southeast Asia including the Philippines as well as South Korea, China and Japan should support economic sectors that are vulnerable to American trade policy and also geopolitical tensions to bolster the region’s resilience to heightened uncertainties.
This is according to the Singapore-based ASEAN+3 Macroeconomic Research Office (AMRO), which today released its ASEAN+3 Financial Stability Report 2025.
Domestic demand
‘While intra-regional trade and domestic demand have become increasingly important growth drivers across ASEAN+3, the region remains deeply connected to the global financial system and is therefore not insulated from global shocks,’ said Dong HE, chief economist of AMRO.
‘Overall, the region’s financial system remains resilient, although pockets of vulnerabilities persist,’ He said in a press briefing held in Singapore. The Philippine Daily Inquirer attended online.
The report finds that export-oriented businesses might face pressures on profit margins amid shifting trade dynamics. Particularly vulnerable are smaller firms with high exposure to the US market.
Also, inflation pressures in the US could persist amid higher import tariffs. This complicates the US Federal Reserve’s monetary policy stance and ‘potentially triggering spillovers to other parts of the world.’
Further, growing uncertainty around the US dollar’s safe-haven status could further affect the global financial landscape adversely.
Global headwinds
Still, the AMRO said the so-called ASEAN+3 economies remain well-positioned to navigate global headwinds.
The think tank said well-calibrated policy mixes and strong fundamentals including robust banking systems, deepening financial markets, ample foreign reserves, and available policy space have provided critical buffers.
‘With inflation largely subdued and expectations well-anchored in most economies, central banks can maintain accommodative monetary policy to support growth,’ AMRO said.
It added that, at the same time, macroprudential tools offer additional safeguards to maintain financial stability and mitigate external spillovers.
‘However, AMRO underscores that support should be carefully targeted to vulnerable sectors and deployed prudently to preserve policy space amid elevated external uncertainty,’ the think tank said.