Next-Generation Policies to Unleash ASEAN’s Full Potential

IMF News, October 26, 2025

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Collective GDP of over 4 trillion dollars; ASEAN is the world’s 4th largest economy and is growing 25 percent faster than the global average.
Despite transformations in geopolitics, trade, technology, demography, and climate, the world—and ASEAN—have been remarkably resilient.
Global growth projections: 3.2 percent this year and 3.1 percent in 2026.
ASEAN growth projection: 4.3 percent in both years.
This performance “falls short of historical trends, but it is better than we feared in April.”

Improved policy fundamentals reflecting years of hard work (e.g., independent central banks, inflation targeting, fiscal rules).
Private sector adaptability: trade frontloading, rapid supply chain reconfiguration, surge in private investment in new technologies—AI in particular.
Continued reliance on Most Favored Nation rules by the majority of countries, alongside deepening regional and bilateral cooperation to cushion fragmentation.

The IMF offers cross-country analysis and the transmission line of bilateral, regional, and global economic assessments.
Collaboration with ASEAN+3 to strengthen and operationalize mutual insurance against shocks provided by the enhanced Chiang Mai Initiative Multilateralisation (CMIM).

Private sector dynamism has been a major driver of growth and jobs.
Structural reforms recommended to:
- Eliminate red tape.
- Improve access to finance.
- Enhance skills of the labor force.
These reforms aim to lift productivity and further strengthen economic resilience.

Current regional trade within ASEAN makes up slightly over 20 percent of total trade, mostly in intermediate goods (compared to 60 percent, mostly final goods, in the EU).
Our analysis shows that reducing nontariff barriers can boost ASEAN’s GDP by 4.3 percent over the long run.
This boost is described as equivalent to adding over one-third of Malaysia’s current GDP to the bloc and creating some 4 million new jobs when coupled with smart labor market policies.

Yes to upgrading the ASEAN Trade in Goods Agreement.
Yes to steps to free up trade in services.
Yes to pairing trade liberalization with stronger financial integration.
Yes to transformative joint investments.
Yes to deeper sharing of technology, including in digital infrastructure and AI.
- Singapore highlighted as a global leader in digital and AI.
- Malaysia, Thailand, and Indonesia noted for making notable progress.
IMF facilitating knowledge sharing on AI preparedness through peer-to-peer engagements in ASEAN and beyond.
Safe and inclusive digital finance chosen as a key theme for the IMF Annual Meetings in Bangkok next year (in partnership with Thai partners).

Invoke the EU’s four freedoms of the second half of the 20th century as inspiration.
Aspiration: “Let the first half of this century be remembered as ASEAN’s time—a highly integrated, dynamic community of nations, working for the good of the region and for the good of the world.”

Kristalina Georgieva, Managing Director, International Monetary Fund — October 26, 2025