Economic integration across the Asia-Pacific has continued to advance despite rising geopolitical tensions, trade policy uncertainties, and disruptions to global supply chains, according to the Asian Economic Integration Report 2026 released recently by the Asian Development Bank (ADB).

The region remains highly integrated through trade, investment, finance, and movement of people. Trade in goods and services continues to be the strongest driver, followed by mobility and FDI, while financial integration remains comparatively weaker.

Within this landscape, Southeast Asia stands out as the most integrated sub-region in the Asia- Pacific. Its economies are closely connected through production networks, trade agreements, and investment flows, placing countries such as Vietnam at the center of evolving regional supply chains.

Regional context

According to the report, Asian economies have demonstrated strong trade resilience despite heightened policy uncertainty and reciprocal tariffs introduced in 2025. Exports to the US declined in several major exporters, but overall global exports continued to grow as shipments were redirected towards other markets, particularly within Asia and Europe. Diversification of export destinations helped sustain momentum even as traditional markets became less reliable.

In particular, despite the tariffs, most major Asian economies still recorded positive overall export growth last year. Taiwan (China) recorded the strongest performance, with total exports rising 35 per cent year-on-year, followed by Vietnam (17 per cent), the Philippines (15 per cent), and Thailand (13 per cent). South Korea began the year with negative export growth in the first quarter but cumulative growth gradually increased, particularly in the latter half of the year. Similar upwards quarterly momentum was observed in Taiwan (China) and across most Southeast Asian economies.

At the same time, the structure of global value chains in Asia is changing. The region is gradually shifting from downstream assembly operations towards more upstream, higher value added activities. Forward linkages - supplying intermediate goods used in production elsewhere - are strengthening, reinforcing Asia’s role as a central supplier in global manufacturing networks.

However, backward linkages remain highly concentrated. Many Asian economies rely heavily on imported inputs for production, making supply chains vulnerable to disruptions from geopolitical tensions, trade restrictions, or logistical bottlenecks. The report highlighted the need for diversification across products, partners, and sectors to reduce exposure to shocks. Strengthening trade agreements and improving trade facilitation and logistics cooperation are identified as key policy priorities.

Early estimates suggest that FDI inflows into Asia in 2025 remained subdued, despite a stabilization of new investments in 2024 following a sharp decline in the previous year. Asia remains an important driver of global FDI, accounting for about 40 per cent of global inflows and outflows. It attracted $614 billion in FDI in 2024, accounting for approximately 40 per cent of global inflows and outflows.

Digital investment has become a major component of these flows. Digital FDI accounted for about 35 per cent of inflows to Asia in 2024 and grew by roughly 25 per cent compared with 2023. AI, fintech, and data centers together represented about three-quarters of digital investment, with these sectors reshaping regional integration by supporting cross-border services, e-commerce, and digital connectivity.

Financial integration is advancing more slowly. The intraregional share of portfolio debt assets increased to 22.2 per cent in 2024, while portfolio equity assets rose to 21.5 per cent. On the liabilities side, intraregional shares reached 31 per cent for debt and 22 per cent for equity.

Movement of people and tourism remain important components of integration. Asia’s outbound migrants reached 100 million in 2024; double the level in 1990. Migration outside the region accounted for 61.2 per cent of the total, while 38.8 per cent occurred within Asia. Remittance inflows totaled $392.8 billion in 2024, up 7.4 per cent from the previous year and representing 43.4 per cent of global remittances.

Tourism has recovered strongly since the pandemic. International arrivals reached 96.3 per cent of 2019 levels in 2024, and tourism receipts exceeded pre-pandemic levels by 5 per cent. The sector contributed $3.2 trillion to the regional economy, equivalent to 8.4 per cent of GDP, and supported approximately 200 million jobs.

Taken together, those trends indicate that regional integration is broad-based, encompassing trade, capital, labor, and services. As global uncertainty intensifies, these links are increasingly viewed as a stabilizing force.

Vietnam’s position

Southeast Asia’s position as the most integrated sub-region reflects its extensive participation in trade and production networks across Asia. Intraregional trade, investment, and infrastructure connectivity have strengthened ties between economies, reducing reliance on external markets and enhancing resilience to global shocks.

Vietnam’s economic structure is closely aligned with these regional dynamics. Export-oriented manufacturing links the country to supply chains that span multiple Asian economies. Participation in global value chains has supported industrialization and growth, but also creates exposure to fluctuations in external demand and disruptions to input supplies.

As Asia moves towards higher value added production and stronger forward linkages, Vietnam’s role within these networks is evolving. The country’s manufacturing sectors are increasingly integrated into upstream activities, supplying components and intermediate goods used in production elsewhere in the region.

Digital transformation is another important factor. Rapid growth in digital FDI across Asia creates opportunities for economies embedded in regional networks, particularly those with manufacturing and technology capabilities. Investments in AI, data centers, and digital services are expanding the scope of cross-border economic activity beyond traditional goods trade.

At the same time, the vulnerabilities identified in the report, such as reliance on imported inputs, concentration of supply sources, and exposure to geopolitical risks, also apply to Vietnam. The country’s economic performance is closely tied to the health of regional supply chains and trade routes.

Migration, remittances, and tourism further reinforce regional linkages. Labor mobility supports income growth and consumption, while tourism flows strengthen services trade and cross-border connectivity. These channels contribute to economic stability even as trade conditions fluctuate.

The Asian Economic Integration Report 2026 emphasizes that deeper regional cooperation is essential to navigating an uncertain global environment. Policy priorities include promoting diversification of exports and partners, strengthening trade agreements, expanding digital connectivity, improving financial infrastructure, and facilitating mobility of people.

Regional cooperation can also help address vulnerabilities associated with concentrated supply chains and volatile capital flows. By pooling resources and coordinating policies, economies can improve resilience to external shocks and sustain growth.

For Southeast Asia, integration is both an opportunity and a framework for managing risk. Economies embedded in regional networks benefit from diversified markets, investment sources, and production links, while those less connected may face greater exposure to global volatility.

Vietnam’s position within the most integrated sub-region places it at the center of this transformation. Its growth prospects are closely linked to the success of regional cooperation and the continued evolution of Asia’s production and investment networks.