The World Bank's latest analysis indicates that Vietnam and Thailand are expected to experience the most significant negative impact on economic growth among the ASEAN-5 in 2026, primarily due to the ongoing conflict in Iran and existing U.S. tariffs [1]. The energy crisis triggered by the Iran war has led to rising fuel prices, prompting governments in the region to implement measures such as encouraging remote work and considering fuel subsidies to mitigate the effects [1].
Vietnam's ambitious 10% economic growth target is now under threat, as external shocks from the Iran conflict and U.S. tariffs weigh heavily on its prospects [1]. Thailand's economy, particularly its fuel-dependent fishing sector, is also highly vulnerable, with rising fuel costs deterring operators from going to sea, which could disrupt food supply chains and export revenues [1].
In contrast, Malaysia is projected to fare better, with the World Bank highlighting the country's economic diversity and the ongoing AI boom as factors that will help cushion the negative effects of the Iran conflict [1]. Malaysia's robust services and technology sectors are expected to provide resilience against energy price shocks [1].
Policymakers across the region are actively seeking strategies to respond to the crisis. Indonesia, for example, faces criticism from economists and business leaders who warn that certain responses to the energy crisis may worsen inflation or fiscal pressures [1]. The World Bank emphasizes the need for targeted policy measures to support vulnerable sectors and maintain macroeconomic stability amid heightened global uncertainty [1].
CONCLUSION
The World Bank's report signals high risks for Vietnam and Thailand's economic growth in 2026 due to the Iran conflict and U.S. tariffs, with Vietnam's 10% growth goal now in jeopardy. Malaysia's diversified economy and AI sector are expected to provide some resilience. Policymakers must implement targeted measures to support vulnerable sectors and maintain stability as the region faces elevated uncertainty.