SEAFIC Futurist Weekly #5

Southeast Asian governments step up efforts to counter economic fallout from Iran War

Governments across Southeast Asia are stepping up efforts to counter the economic fallout from the ongoing Iran War, namely by addressing inflation effects or balance of payment strains. Read more.

Summary: Southeast Asia remains heavily reliant upon oil imports that have been disrupted by the closure of the Strait of Hormuz. The Philippines was the first country in the region to raise its rates in April. Indonesia raised its main policy interest rate by 50 basis points to 5.25%, its first increase in two months. In Thailand, the government approved a THB 176 billion package of cash aid and other benefits for millions of people to mitigate the impact of higher costs. Indonesia, Thailand, Vietnam and the Philippines have also taken steps aimed at reducing fuel demand, such as by encouraging remote work, cutting back official state travel, and cancelling flights.

Malaysia’s GDP expands 5.4% year-on-year in first quarter of 2026 

Malaysia’s economy expanded 5.4% in the first quarter of this year, supported by resilient household spending, investment activity, and continued strength in electrical and electronic (E&E) exports. Read more.

Summary: While the headline figure of 5.4% growth suggests a robust economy, underlying figures suggest an economy that is losing momentum. Monthly real GDP growth slowed from 7.1% in December to 6.8% in January, 5.2% in February, and 4.1% by March. Private consumption growth slowed to 4.7% in the first quarter of 2026 from 5.6% in the preceding quarter. Headline inflation in Malaysia rose to 1.6% in the first quarter of 2026 from 1.3% in the previous quarter, driven partly by higher fuel and electricity prices.

Thailand’s trade deficit widens to record USD 10 billion in April 2026

Thailand’s trade deficit widened to USD 10 billion in April of this year, its widest level since record taking back in 1991. Read more.

Summary: Higher imports of capital goods and raw materials, along with soaring oil and gas prices, pushed Thailand’s trade deficit to a record USD 10 billion. Imports surged 45% year-on-year in April, while exports rose 23.1%. Imports outpaced exports for a seventh straight month in April.

Bangko Sentral ng Pilipinas Governor flags aggressive rate hikes amidst inflationary pressures

The governor of the Bangko Sentral ng Pilipinas, Eli Remolona, has suggested that the Philippines’ central bank may need to react aggressively to tame price pressures spurred by the Iran war. Read more.

Summary: Remolona stated that Filipino monetary authorities are considering raising the rate before the next policy meeting on 18 June. He has also suggested that they may also wait until the release of the latest inflation data on 5 June before making any decision on monetary policy. Consumer prices soared 7.2% in April 2026.

Singapore’s economy beats expectations and expands 6% year-on-year in first quarter

Singapore’s gross domestic product (GDP) expanded 6% year-on-year in the first quarter, beating an official advance estimate of 4.6%. Read more.

Summary: Singapore’s Trade Ministry stated that growth was driven by the strong performance of Singapore’s wholesale trade, manufacturing, and finance and insurance sectors. Robust global AI-related demand, in particular, led to growth in the machinery, equipment & supplies segment of the wholesale trade sector, as well as the electronics and precision engineering clusters within the manufacturing sector. Singapore is a major global producer of semiconductors and semiconductor equipment, accounting for about 10% of semiconductor production and 20% of semiconductor chip equipment production globally.

Government to take control of exports of country’s major commodities

The Indonesian government is planning on taking control of the export of the country’s major commodities through a new entity called Danantara Sumberdaya Indonesia, which will sit under Indonesia’s new sovereign wealth fund Danantara. Read more.

Summary: The new policy is designed to increase transparency and tackle tax evasion, and will begin with the export of coal and palm oil. The new entity will handle exports that total some USD 65 billion a year. Commodity producers spread across the country are connected with foreign buyers through a network of hundreds of agents, traders, and trading houses, from multinational giants to small, local firms. Analysts warn that replicating this ecosystem will be a daunting task.

Southeast Asia is currently being battered by the economic fallout of the global energy crisis. Energy and fertilizer shortages caused by the ongoing closure of the Strait of Hormuz have driven up inflation, undermined local currencies, and threatened livelihoods. Currencies and bond yields of import-dependent countries have also come under pressure. The currencies of Indonesia and the Philippines are among the worst performers in Asia this year, with the Philippine peso having fallen 4.66% against the US dollar in 2026, while the Indonesian rupiah fell 5.75%. 

Year on year change in consumer prices index, April 2025 - April 2026 (%)

*Data for the Philippines, Vietnam, Thailand, Indonesia, and Malaysia are as of April 2026, data for Singapore as of March 2026.

Source: Financial Times

Original chart can be found here

Vietnamese President To Lam to visit Singapore (29 - 31 May 2026)

Why it matters: Bilateral trade between Vietnam and Singapore reached USD 31.3 billion in 2025, up nearly 25% from 2024. Singapore is also Vietnam’s second-largest foreign investor, with cumulative investment reaching about USD 91.6 billion. In 2025 alone, Singapore was Vietnam's largest foreign investor, with investments spanning industrial real estate, infrastructure, energy, green finance, digital economy and logistics. Both countries upgraded their relations to a Comprehensive Strategic Partnership in March 2025. Lam is also set to give a keynote address at the Shangri - La Dialogue, a prominent regional forum to discuss regional and international security issues. 

Source: Top leader’s Singapore visit to create fresh momentum for bilateral ties: ambassador 

Shangri-La Dialogue (29 - 31 May 2026)

Why it matters: The Shangri-La Dialogue is among the most prominent security and geopolitics-focused forums in the region. The ongoing war in Iran will be among the topics discussed during the forum, including its impact on global energy security, the ongoing diplomatic efforts to end the war, and its larger impact on US posture in the region. The forum also takes place shortly after the summit between Chinese President Xi Jinping and Trump earlier this month in Beijing and amid simmering tensions over Taiwan.

Source: Global tensions set to stalk Singapore's flagship defence summit | Reuters

Vietnamese President To Lam to visit the Philippines (31 May - 1 June 2026)

Why it matters: According to the office of the Philippines President Ferdinand Marcos Jr, To Lam will be hosted in Manila for two days, when both sides will discuss trade, security and maritime cooperation. Under Marcos Jr., the Philippines has sought to build on and widen its network of security partnerships to counter an increasingly assertive China in the South China Sea. 

Source: Vietnam’s leader to visit Philippines next week for trade, security talks | FMT