CWA # 2056
The World This Quarter
Southeast Asia (Jan-Mar 2026)
Deteriorating situation in Myanmar, Philippines as the ASEAN Chair, New government in Thailand, and Economic & Environmental challenges
Southeast Asia currently faces a mix of growth opportunities and significant challenges stemming from the war in West Asia, tariff disputes, and rapidly worsening climate change.
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Ashik J Bonofer
5 April 2026
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The Iran–Israel–US conflict has overshadowed regional trends in Southeast Asia during the first quarter. The energy crisis caused by the closure of the Straits of Hormuz had a more profound impact on Southeast Asian economies. The region, which over the past year experienced economic volatility due to liberation day tariffs, faced an even greater crisis due to energy shortages. With countries like Thailand and Vietnam importing over 75 per cent of their oil from West Asia, the prolonged war could further drive up oil prices, leading to high inflation. The Philippines has already declared a national emergency, and fuel and gas rationing have become common in most countries. The region is also bracing for fertilizer shortages.
1. Deteriorating situation in Myanmar
The fuel shortage, combined with ongoing internal conflict, has thrown the country into a volatile situation. The conflict in Myanmar is fought on multiple fronts, and various reports indicate that the military has intensified its air campaign against ethnic militant groups. Making the crisis worse were the January 2026 elections in Myanmar, which resulted in the junta-backed party winning. According to the results released on 29 and 30 January 2026, the Union Solidarity and Development Party (USDP) secured 232 of the 263 seats in the lower Pyithu Hluttaw and 109 of the 157 seats in the upper Amyotha Hluttaw. While the Junta has attempted to legitimize the elections, ASEAN and the international community have refused to endorse the vote.
Myanmar is also witnessing an acute food insecurity, with over 15 million people facing food shortages. The Junta’s continued stance of blocking aid to the regions in conflict has only increased the challenges faced by the people. The country is likely to face an even larger crisis in 2026 due to fuel and fertilizer shortages.
2. The 14th National Congress of the Communist Party of Vietnam
The 14th National Congress of the Communist Party of Vietnam was held between January 19 and 23, 2026. This Congress played an important role in electing 200 members from the 1500 delegates. These elected delegates will be instrumental in selecting the Politburo members who will govern the country for the next five years. This Congress came at the time when Vietnam was torn between the American Liberation Day Tariff and the West Asian conflict. The party congress has announced its aim to build a lean, compact, strong, and effective Vietnam in an era of growth, digital transformation, and resurgence.
3. Philippines as the ASEAN Chair and its challenges
As Manila takes over as ASEAN Chair in 2026, the region is already in crisis due to fuel shortages and rising inflation. While these are larger, looming issues, Manila will be forced to address some of the challenges, namely the South China Sea and the rivalry between China and the US's allies. Whether Manila will be able to continue ASEAN’s balanced stand between China and the US remains to be seen. With the US caught up in West Asia, the region is witnessing a volatile situation in which China is likely to behave like a bully to smaller neighbours. Will mania be able to maintain balance in such a scenario? It needs to be watched.
After a long hiatus, the Philippines and China have held formal discussions on the South China Sea territorial dispute. While this is regarded as a major milestone, implementing and maintaining a balanced stance remains a greater challenge. It should be noted that China is keen to resume discussions on joint oil and gas ventures.
4. Border issues and the New government in Thailand
Thailand and Cambodia signed a ceasefire agreement in 2025. This agreement was signed during US President Donald Trump's visit to Southeast Asia. However, the border regions have seen frequent clashes due to the economic crisis and the mass distrust among the parties involved in the conflict.
In February 2026, Thailand also held elections, and the new Bhumjaithai party-led coalition emerged as the leading partner in forming the government, although it did not gain an absolute majority. With the coalition's support, Anutin Charnvirakul secured 251 votes in parliament and was reelected as Prime Minister. According to many election watchers, the result of this election would lead to political stability after years of deadlock and volatility.
5. The Climate Change and Environmental Challenges
This region has also witnessed the world’s worst natural disasters. Reconstruction of Sumatra following the devastating cycle in November 2025 is being carried out by the Indonesian government. Temporary housing provided by the government after the disaster is now being replaced with permanent structures. It is estimated that the total reconstruction would cost around $3.11 billion. However, the larger looming fear at this juncture is whether there can be a permanent solution to the environmental crisis. Further complicating the crisis is corruption in reconstruction, and despite best efforts to curb it, a solution remains a distant dream. Many environmentalists have expressed concern that this region will face severe challenges this year unless nations develop effective plans to mitigate environmental issues.
6. Economic challenges
The global economic challenges also had a stronger impact on Southeast Asia. Starting with Liberation Day Tariffs, followed by the impact of AI on the job market and the current energy crisis due to the war in West Asia, has pushed the region into uncertainty. Adding to the challenge is China’s weak growth, which has affected export prices in countries like Thailand and Vietnam. Despite the slowing market, Southeast Asia remains the top global FDI destination in 2026. But not all countries have benefited from FDI flows; investors remain sensitive to investing in countries facing political risks, such as Thailand and Myanmar. While countries like Laos, Malaysia, and Singapore have been promoting tourism through major festivals, sports, and mega events, a similar trend has not been seen across all countries. Hence, one witnesses an imbalanced growth pattern among the ASEAN countries.
To conclude: East Asia in Jan-Mar 2026
Southeast Asia currently faces a mix of growth opportunities and significant challenges stemming from the war in West Asia, tariff disputes, and rapidly worsening climate change. Between January and March 2026, the region has experienced more turbulence than stability, testing its long-standing approach of maintaining a cautious balance amid major global disruptions. While this neutral stance once supported stability, it now risks yielding limited meaningful progress, particularly as external pressures intersect with growing internal contradictions within the region. The outlook for Southeast Asia depends on how effectively its states can shift from simply managing risks to collective problem-solving, and whether they can turn their tradition of balancing into active cooperation to overcome these difficult times.
About the author
Ashik J Bonofer is an Assistant Professor at the Department of Political Science, Madras Christian College, Chennai.
