The World Bank has projected that Vietnam and Thailand will experience the most significant negative impact on economic growth among the ASEAN-5 countries in 2026, primarily due to the ongoing Iran war and persistent U.S. tariffs [1]. The report highlights that both nations are particularly vulnerable to external shocks because of their economic structures, with the Iran conflict intensifying volatility in global energy markets and compounding the effects of U.S. trade measures [1].
Malaysia, in contrast, is expected to be more resilient, benefiting from its diversified economy and an anticipated boost from the artificial intelligence (AI) boom. The World Bank notes that Malaysia's economic diversity provides a buffer against sector-specific shocks and external headwinds caused by the Middle East conflict [1].
In Vietnam, the government has responded to mounting energy pressures by urging businesses to encourage employees to work from home to conserve fuel, leading to scenes of people lining up to buy petrol in Hanoi. These measures underscore the growing strain on energy supplies and costs, which are likely to persist in the near future [1].
The World Bank warns that Vietnam's ambitious 10% economic growth target is now at risk due to these disruptions, while Thailand's energy-dependent sectors, such as fishing, are already suffering from rising fuel costs. Analysts and market participants caution that if the Iran conflict continues or escalates, it could further drive up oil prices and exacerbate inflationary challenges across the region [1].
CONCLUSION
The World Bank's assessment signals heightened risks for Vietnam and Thailand, with both countries facing significant headwinds from the Iran conflict and U.S. tariffs. Malaysia stands out as more resilient, thanks to its diversified economy and AI-driven growth prospects. The ongoing volatility in energy markets and potential for further inflation suggest a challenging outlook for the region, especially if geopolitical tensions persist.