This article was first published in Financial Times X The Edge Singapore Shifting Sands on January 22, 2026.

As we enter 2026, the ASEAN+3 region, comprising the ASEAN economies plus China, Japan, and Korea, sits at the intersection of demographic, technological, environmental, and geopolitical shifts unfolding simultaneously. Growth over the coming decade is expected to be around 4 percent, sustained by the region’s strong fundamentals. Yet the path ahead will be shaped by how policymakers navigate an increasingly complex landscape.

Against this backdrop, ten forces—the “Ten Ds”—will define ASEAN+3’s economic trajectory over the next decade. Whether the region emerges stronger will hinge on deeper integration and its capacity for resilience and agility.

Foundations of sustainable growth

Demographics. Demographic trends within ASEAN+3 are diverging. China, Japan and Korea are aging rapidly, while Indonesia and the Philippines still enjoy relatively young and growing workforces. These demographic patterns make labor-market reforms, human capital investments, and stronger social protection systems essential to support inclusive growth while safeguarding long-term fiscal sustainability.

Development. Infrastructure gaps remain a binding constraint on growth potential. Despite strong economic expansion over the past two decades, infrastructure deficits—from transport and energy to digital connectivity—persist across ASEAN+3. The region faces roughly USD 1.9 trillion in unmet infrastructure needs. Closing these gaps is critical not only for productivity gains but also for realizing deeper regional integration.

Digitalization. Digital transformation is reshaping business models and financial systems across ASEAN+3. However, closing the digital infrastructure investment gap, estimated at USD 1.6 trillion globally, remains urgent. The policy challenge is to ensure infrastructure, regulation, and skills development keep pace, so that digitalization enhances productivity and inclusion rather than deepening existing divides.

Pressures testing policy frameworks

Debt. Elevated government debt in several ASEAN+3 economies is tightening fiscal space precisely when public investment is most needed. With interest costs high and growth moderating, rebuilding fiscal buffers while sustaining effective spending and transparent fiscal frameworks will be crucial for stability and market confidence.

Defense. Rising geopolitical tensions are pushing governments to increase defense spending, sharpening trade-offs with social and development priorities. Defense outlays in ASEAN alone exceeded USD 50.6 billion in 2024, with spending in many ASEAN economies averaging around 1.8 percent of GDP. Managing these pressures will require careful calibration, meeting strategic needs without crowding out the social and developmental investments essential for long-term growth and resilience.

Disaster risk. Natural disaster and climate change are perennial risks across ASEAN+3, with impacts most acute in its ASEAN economies, which accounted for around 7.7 percent of global disaster-related fatalities and lost an estimated USD 11 billion between 2015 and 2020. Climate change is intensifying both the frequency and severity of extreme events, making investment in resilient infrastructure and effective disaster risk financing integral to fiscal sustainability and long-term growth.

Dollar dependence. The US dollar’s central role in global finance continues to expose ASEAN+3 economies to external shocks, particularly where dollar-denominated debt is significant. Strengthening local-currency settlement, deepening regional liquidity frameworks, and maintaining open external engagement can help reduce vulnerability while preserving global openness.

Dynamics of transformation

Diversification of trade and investment. As global value chains adjust under strategic competition and technology shifts, ASEAN+3 must deepen intra-regional linkages while maintaining strong external partnerships. Integration within ASEAN+3 should complement diversification with external partners to avoid fragmentation. Achieving this balance will help mitigate the risks of over-reliance on any single market or supply chain.

Decarbonization. ASEAN+3 is home to three of the world’s 10 largest greenhouse-gas (GHG) emitters and accounts for over one-third of global GHG emissions. Although all member economies have committed to climate action under the Paris Agreement, scaling clean energy, green infrastructure, and sustainable finance will require managing transition costs and maintaining access to global markets. Greater cooperation—especially in cross-border energy trade, technology innovation, and green finance—can accelerate the transition. Initiatives such as the Asia Zero Emission Community (AZEC) highlights collaborative efforts toward net-zero goals.

Disruptive innovation. New technologies—notably AI, biotechnology, and quantum computing—offer ASEAN+3 powerful tools to navigate demographic shifts and global trade reconfiguration. Yet digital disruption is increasingly viewed as a major source of risk in the Asia-Pacific region, with the pace of change raising challenges for jobs, regulation, and distribution of gains—underscoring  the need for policies that foster innovation while ensuring inclusiveness and effective governance.

Integration, resilience and agility

What distinguishes these Ten Ds is not just their individual impact, but their interdependence and the uncertainty surrounding how they will interact. Under a benign scenario of easing trade tensions and sustained global cooperation, the region’s fundamentals position it for sustained, inclusive growth. Under a more adverse scenario of prolonged fragmentation, pressures on fiscal space, supply chains, and financial stability would test policy frameworks more severely.

In either case, effective policy responses rest on two core qualities: resilience, the capacity to withstand shocks; and agility, the ability to adapt and pivot as conditions change. Deeper regional integration—anchored in an open, outward-looking orientation—is central to both. Strengthening ASEAN+3 production and financial networks without retreating into inward-looking fragmentation will be essential to navigating the pressures and transitions ahead.

Over the past decade, AMRO, as an international organization, has helped safeguard ASEAN+3’s economic and financial stability through surveillance, policy advice, and a regional financial safety net. As the region faces rising uncertainty, the effectiveness of these frameworks will be further tested. How ASEAN+3 manages demographics, digitalization, debt, disaster risk, and the other forces outlined in the Ten Ds will determine whether the region merely weathers the next decade or emerges more resilient, agile, and integrated.