ASEAN-5 in an era of geoeconomic realignment: Opportunities and risks in a fragmenting global economy

Introduction

Rising geoeconomic fragmentation and intensifying trade tensions between the world’s two largest economies have put the Association of Southeast Asian Nations (ASEAN) in a delicate balancing position. Established in 1967 to promote economic, political, and security cooperation, ASEAN today comprises eleven countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, and Timor-Leste.

Within the bloc, the five largest middle-income emerging market and developing economies (EMDEs)—Indonesia, Malaysia, the Philippines, Thailand, and Vietnam (collectively ASEAN-5)—account for more than 84 percent of gross domestic product (GDP) and 87 percent of the population. This brief therefore focuses on these economies, examining their main industries, their roles in global supply chains, and the challenges and opportunities they face.

The central finding is that ASEAN-5 is well positioned for sustained growth and increasing significance in the global economy. A young and expanding population, improving human capital, abundant natural resources, and strategic proximity to major markets in South and East Asia underpin the bloc’s strong economic potential. Deep trade ties with East Asia, the European Union (EU), and the United States have further cemented the region’s role in global supply chains, particularly in high-tech manufacturing, energy, and consumer markets.

However, the results of this potential are not guaranteed. Rising geoeconomic fragmentation, trade disruptions, climate vulnerabilities, persistent infrastructure gaps, and regulatory constraints all pose significant headwinds that could limit the region’s trajectory if they are left unaddressed.

The brief proceeds as follows: Section II provides an overview of the main trends in the global economy, with a focus on middle-income EMDEs. Section III examines ASEAN-5 economies, their role in global trade and supply chains, and key opportunities. Section IV provides a discussion of the main challenges facing the bloc. Section V offers policy recommendations to help unlock ASEAN-5’s full potential, and Section VI concludes the brief.

Amin Mohseni-Cheraghlou is a senior consultant with the Atlantic Council’s GeoEconomics Center, a senior lecturer in economics at American University, and a faculty affiliate at Columbia University. He is a development macroeconomist, educator, and policy advisor specializing in geoeconomics, global energy markets, and international trade and finance, with a particular focus on China and the Middle East and North Africa (MENA). Previously, he served as Senior Advisor to the Executive Director at the International Monetary Fund (IMF) and spent more than a decade as a Research Economist at the World Bank.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

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