SCB EIC sees CLMV growth moderating in 2026 as geopolitical shocks and trade risks test regional resilience.

 

CLMV growth is slowing as external shocks reveal widening differences in resilience across the region.

SCB EIC expects CLMV growth to moderate to 6.2% in 2026 from 7.1% in 2025, marking a broad-based slowdown across all four economies. Cambodia is projected to grow by 3.7% (down from 5.3% in 2025), Lao PDR by 4.1% (from 4.8%), Vietnam by 7.1% (from 8.0%), and Myanmar by 2.6% (from 3.4%).

The slowdown reflects a more difficult external environment and limited domestic policy buffers. Prolonged Middle East tensions could keep energy prices elevated, add inflationary pressure, weaken local currencies, and delay monetary easing, weighing on domestic demand and financial stability. Softer global growth may also dampen exports, tourism, and FDI inflows, while China's excess capacity and greater Chinese import penetration could intensify competition for domestic producers. Potential U.S. Section 301 tariffs remain a key downside risk, especially for Vietnam and Cambodia given their exposure to the U.S. export market.

Country-specific buffers should ease the slowdown but could not reverse the broader moderation trend. Vietnam should continue to lead the region, while Cambodia, Lao PDR, and Myanmar will rely on narrower support factors to cushion weaker momentum.

Vietnam is expected to remain the strongest performer in CLMV, supported by its role in global electronics supply chains, AI-related exports, resilient tourism sector, sustained FDI inflows, and supportive macroeconomic policies. However, its high export exposure also leaves Vietnam more vulnerable to softer global demand, prolonged energy-price shocks, and potential U.S. Section 301 tariffs.

Cambodia's growth is likely to slow as higher energy import costs, weaker domestic demand, Thailand-Cambodia border tensions, and elevated NPLs weigh on economic activities. Still, competitive light manufacturing sector, resilient exports, and adequate external buffers should help limit the downside.

Lao PDR's economy is expected to soften as kip weakness keeps import costs and inflation elevated, limiting room for further monetary easing. Electricity exports and tourism should remain key stabilizers, but high external debt and limited policy space will keep external stability fragile.

Myanmar's recovery is likely to remain fragile despite some support from external demand, rare-earth exports, and post-earthquake reconstruction domestic activities. However, ongoing political instability, persistent structural constraints, and weak domestic conditions will continue to constrain growth.

Implication for Thailand: narrower trade surplus and more selective investment flows

For Thailand, the key implication is a likely narrower trade surplus with CLMV in 2026. Exports are expected to weaken amid softer regional demand and continued Thailand–Cambodia border tensions, while imports should remain resilient, led by AI-related products—particularly computers and machinery—from Vietnam.

Thailand’s outward investment in CLMV is also expected to moderate as uncertainty pushes firms toward a more selective, wait-and-see approach. Even so, CLMV remains strategically important for Thai businesses with a longer-term view, supported by natural resources, cost competitiveness, export capabilities, and regional market linkages.