Singapore sees region thriving amid ‘breakdown’ of world order

Singapore's top diplomat, Vivian Balakrishnan, highlighted what he described as "a moment of great potential" for Southeast Asia, as economies rapidly expand due to surging demand for technology. In his conference speech, he pointed out that semiconductors and AI were major factors enabling the region's economies to outperform expectations. The city-state witnessed a 6.1% expansion rate in the first half of the year, with Taiwan overtaking China as its largest trading partner.

Balakrishnan emphasized that despite the "crazy world," the breakdown in world order, trade disruption, and supply chain issues, the region has experienced significant growth. According to the World Bank, several Asian economies, including Vietnam, Indonesia, and Malaysia, have outpaced expectations in high-tech exports, with Vietnam projected to grow 7.4% in 2026, Indonesia 5.2%, and Malaysia 5.1%.

Singapore upgraded its economic growth forecast for 2026 to between 4.5%-5.5% due to the electronics sector's impressive surge, which reached a 132% increase in August compared to the previous year.

While the region's reliance on AI-related industries may become a weakness if global investment in the technology slows, Balakrishnan acknowledged the risks. He cautioned about the potential threats posed by rogue states and non-state actors who could exploit AI for disruptive purposes, including in chemistry, biology, and weapons of mass destruction.

Despite these challenges, as Singapore prepares to chair the Association of Southeast Asian Nations (ASEAN) next year, the diplomat urged the region to capitalize on the momentum to deepen economic integration.

Balakrishnan labeled the current situation as "a moment of great potential and peril," promising that there is also "a lot of money to be made" in the region's booming economy.