Insights

From Resilience to Ascendance: How Southeast Asia is navigating global shocks on its path to broader prosperity

November 2026

Introduction

Southeast Asia stands at a pivotal moment. After decades of benefiting from globalization, the region now faces a different challenge: transforming resilience in the face of repeated global shocks into sustained, broad-based prosperity. Whether Southeast Asia becomes the world’s next major engine of growth will depend less on the trajectory of U.S.-China competition than on the choices its governments make to strengthen competitiveness, deepen capital markets, improve governance, and invest in the industries of the future. This report argues that while geopolitics will shape the region’s environment, Southeast Asia’s long-term success will ultimately be determined by its own policy choices.

Key takeaways

  • Southeast Asia has pragmatically navigated a relentless series of shocks. COVID, the trade war, and the Iran energy shock have all imposed costs on the region while climate impacts remain challenging. While these shocks have sparked renewed effort to diversify their economies and resource bases, they also carry long half-lives.
  • After decades of benefiting from globalization and China’s rise, the region must now find a new path to sustained, broad-based prosperity. Much of the region is in a race against time: to escape the middle-income trap before it loses its demographic dividend.
  • The region has the potential to offer a model for middle powers in a world increasingly riven by the capriciousness of its largest countries. More than a frontline in U.S.-China competition, Southeast Asia is strategically significant in its own right as the world’s third largest population center, fifth largest economy, and the crossroads of three global religions.
  • The region’s long-term trajectory will ultimately depend to a significant degree on the choices its individual countries make. Countries are taking steps to formalize and further urbanize their economies, accelerate connectivity, strengthen governance and capital markets, and support the growth of the digital economy. Nonetheless, progress trails ambitions in ways that are difficult to ignore.

Read our full report

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