ASEAN economies are grappling with the repercussions of a recent 10% reciprocal tariff, as outlined in CGS International’s latest economic note.
The tariff has led to downward adjustments in growth forecasts for Singapore, Malaysia, and Thailand, whilst Vietnam emerges as the most adversely affected due to its high dependence on the US market. Indonesia, however, remains relatively insulated given its low export reliance on the US.
The exclusion of the semiconductor segment from the tariff list, announced on 2 April and extended on 11 April, offers some respite. Over 60% of Singapore and Malaysia’s exports to the US are exempted, compared to 30% for Thailand and Vietnam, and 10% for Indonesia. However, CGS International warns that this relief may be temporary as the US administration considers additional tariffs targeting the semiconductor and pharmaceutical sectors.
The economic note suggests that the ASEAN region may need to pivot towards a consumption-driven growth model, as the US remains a critical market for its exports. The possibility of a ‘Mar-a-Lago accord’ could cement a permanent minimum tariff, further complicating ASEAN’s export-oriented growth strategy.
Forecast revisions include Malaysia’s GDP growth for 2025 being lowered to 4.2% from 4.6%, and Singapore’s to 1.6% from 2.5%. Thailand’s forecast sees a slight increase to 1.8% from an earlier 1.5%, though still below pre-April expectations. Indonesia’s growth remains projected at 5.0%, reflecting its relative insulation from the trade tensions.
These developments underscore the need for ASEAN economies to navigate the evolving trade landscape carefully, balancing national interests with external pressures.
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