SCB EIC forecasts CLMV economic growth to decelerate to 5.1% in 2025, impacted by global trade risks, elevated U.S. tariffs, political instability, and competition from China’s low-cost imports. Vietnam is expected to drive growth, while Myanmar faces economic contraction amid ongoing regional tensions.
Growth Slowdown and Trade Risks
SCB EIC forecasts a deceleration in CLMV economies to 5.1% growth in 2025, down from 6.3% in 2024, driven by slowing global trade and economic activity. Elevated U.S. tariffs under a potential Trump 2.0 policy threaten export-driven CLMV nations, especially Vietnam and Cambodia, which depend heavily on the U.S. market. In addition, cheap Chinese imports undermine local competitiveness. Political instability in Myanmar, border tensions in Cambodia, and Laos’ debt vulnerabilities add to the risks, dampening investor confidence and consumption.
Country-Specific Challenges and Opportunities
Vietnam emerges as the strongest performer due to production shifts towards ASEAN, improved supply chains, and supportive reforms. Cambodia’s moderate growth faces headwinds from tariffs and border tensions, though tourism and exports provide some relief. Lao PDR struggles with external debt and financial sector weaknesses, while Myanmar’s economy contracts amid political turmoil and natural disasters, restricting recovery prospects.
Impact on Regional Trade and Investment
Trade and investment between Thailand and CLMV are softening amid weaker demand, ongoing border conflicts, and greater global trade uncertainty. Although Thailand’s investments diversify across sectors, political instability and regional tensions may curb future flows. The Thailand-Cambodia conflict risks prolonging border closures, hurting trade and investment sentiment, but Thai labor markets may adapt due to alternative workforce sources.
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