The ASEAN+3 region - comprising the ten Southeast Asian nations plus China, Japan, and South Korea - is projected to maintain a steady growth trajectory of 4.0 per cent in 2026, according to the latest AMRO Regional Economic Outlook released on January 21, 2026. While this marks a slight moderation from the 4.3 per cent growth estimated for 2025, the region’s retail and apparel sectors are emerging as primary beneficiaries of ‘friend-shoring’ and robust domestic demand. With regional inflation contained at a projected 1.2 per cent, consumer purchasing power remains resilient, providing a stable foundation for the fashion industry’s ongoing premiumization.
Strategic near-shoring and retail diversification
The ‘China Plus One’ strategy continues to redirect massive Foreign Direct Investment (FDI) into Southeast Asia’s manufacturing hubs. Vietnam is forecasted to lead the region with a staggering 7.6 per cent GDP growth in 2026, solidifying its role as a premier destination for high-value garment and textile production. This industrial shift is mirrored in the retail landscape, where major players are capitalizing on a burgeoning middle class. Data indicates,by 2026-end, ASEAN will account for one in six households entering the global ‘consuming class,’ a demographic shift that is driving international fashion labels to expand their physical footprints in Tier I cities across Indonesia, Thailand, and Malaysia.
Navigating trade volatility through integration
Despite the positive outlook, the sector faces headwinds from unpredictable global trade policies and the potential broadening of protectionist measures. To mitigate these risks, Dong He, Chief Economist, AMRO emphasizes the urgency of deepening regional economic integration. By leveraging the Regional Comprehensive Economic Partnership (RCEP), apparel manufacturers are reducing their dependence on high-tariff Western markets and pivoting toward intra-regional trade. This ‘regionalization’ of the supply chain not only cushions against external shocks but also aligns with the growing consumer demand for localized, sustainable fashion that minimizes long-haul logistics emissions.
The ASEAN+3 Macroeconomic Research Office (AMRO) is an international organization tasked with ensuring the macroeconomic and financial stability of the ASEAN+3 region. Based in Singapore, AMRO provides critical surveillance and technical assistance to its member states. Historically established after the Asian Financial Crisis, the office now serves as the primary data hub for regional growth plans, monitoring a $30 trillion collective economy and its high-growth sectors like digital retail and advanced manufacturing.
