Southeast Asia economic outlook 2025: Uneven growth, trade barriers, and regional tensions
30 Aug 20256 min read
Summary
- Most of Asia’s fresh food still begins in small farms and fishing villages, but weak infrastructure and unreliable cold storage cause major losses before products reach consumers. With over 40 percent of food loss occurring post-harvest, DP World’s Glen Hilton highlights the urgent need to extend cold chain systems deeper into rural areas as urbanisation accelerates and demand for freshness rises.
- Building reliable cold chains remains complex and costly, with high energy needs, uneven regulation and fragmented supply chains slowing progress. DP World’s initiatives in Malaysia, Australia and along the Mekong River show that investment in faster routes, efficient storage and digital monitoring can cut waste, extend shelf life and raise farmer income.
- Innovation and policy support are shaping the next stage. Solar-powered cooling, mobile cold rooms and IoT tracking are making cold chains viable for small producers, while ASEAN-wide standards and government incentives can unlock wider access. The path forward lies in treating cold chain infrastructure as essential to food security and rural prosperity, ensuring freshness and value reach from the first mile to the final market.
Regional Growth Overview and Key Data
A closer look from global management consulting firm, Mckinsey & Company’s Southeast Asia quarterly economic review provides clearer insights into country-level dynamics:
Vietnam remains a standout, though Q2 and Q3 growth slipped to the slowest in three quarters as electronics exports faltered. Indonesia’s Q1 growth of 4.87% marked a three-year low. Meanwhile, the Philippines managed a slim 0.1% sequential uptick thanks to remittances and infrastructure spending.
Headwinds Return
According to ADB, much of the slowdown comes from global trade. Electronics exports, which power many of Southeast Asia’s economies, have taken a hit. Malaysia and Vietnam are especially exposed, facing U.S. tariffs on electronics up to 49%. Vietnam has also been hit by “transshipment” rules that restrict goods rerouted from China.Thailand’s auto sector is feeling pressure as new U.S. tariffs on cars and motorcycles (25%) hit exports. Companies are now exploring alternative markets or production shifts.
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“The region is expected to maintain robust growth of above 4 percent in 2025 and 2026. Domestic demand will remain a key pillar of growth, supported by improving investment activity… However, the outlook is subject to significant uncertainties, especially from U.S. trade policies, that could weigh on the region’s growth,” according to the ASEAN+3 Macroeconomic Research Office (AMRO).
Looking Ahead
As the region adapts, diversification and scenario planning will be essential. Despite growing pains, Southeast Asia remains one of the most dynamic and adaptable emerging markets.
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