Testing ASEAN’s resilience amid the global debt surge

Amid increasingly uncertain global geopolitics and security, the global geoeconomic landscape is becoming increasingly complex. Most recently, the IMF Global Debt Database stated that total global debt (combined government and private debt) reached around US$251 trillion in 2024, or slightly above 235% of global GDP. Of this amount, public debt reached around US$99.2 trillion, while private debt stood at around US$151.8 trillion. The global public debt ratio itself increased to nearly 93% of GDP in 2024, while the IMF Fiscal Monitor April 2026 estimates that gross global government debt had reached nearly 94% of GDP in 2025 and, under current fiscal policies, could touch 100% of GDP by 2029.

And this condition is becoming increasingly burdensome because maturing old debt must be refinanced at higher interest rates than during the previous low-interest-rate era. The IMF notes that government interest payments globally have increased from around 2% to nearly 3% of GDP over the past four years, alongside the additional burden on governments to repay maturing debt.

The growth in the global debt ratio is important, because the increase in debt is occurring at a time when many countries are facing increasingly large public spending needs, while interest costs and maturing debt are also rising. As a result, an increasingly large share of budgets is allocated to debt payments, resulting in narrower fiscal space available to deal with the next crisis or economic shock.

Government debt ratios in several ASEAN member countries also vary considerably. The IMF states that Singapore has a very high ratio relative to GDP, while Malaysia and Thailand are in the range of 65–70%. Meanwhile, Indonesia is around 41%, while Vietnam and Cambodia are below 35%. Differences in debt ratios show that the level of debt alone is not sufficient to measure a country's resilience, because debt structure, investor base, denomination currency, foreign exchange reserves, and fiscal capacity also determine a country's ability to face external pressures.

Looking at the trend of rising global debt ratios, this naturally raises questions about the region's financial resilience. When global costs increase due to debt allocation and burdens, and international liquidity becomes tighter, does ASEAN have sufficient capacity to absorb such pressures?.

When debt tests resilience

Holling introduced the concept of ecological resilience to explain the ability of a system to absorb disturbances without losing its basic structure and function. The concept was subsequently developed across various disciplines, including economics and finance. In this context, financial resilience can be defined as the ability of a country's economic and financial system to absorb or avoid economic shocks, without experiencing systemic disruption and then return to functioning normally.

This means that when global debt ratios rise, interest rates increase, the dollar exchange rate strengthens significantly, investors withdraw their funds from markets, and global oil prices increase, the question is how strongly can ASEAN absorb these various shocks?

Current economic developments in ASEAN show that the region already has a number of financial buffers that can function as economic buffers against external pressures. Although buffers do not eliminate risks, they can increase the region's ability to absorb and adapt to all forms of shocks.Financial buffers include:

First,the rapid development of bond markets in ASEAN countries using local currencies. This is an important change in the financial structure of many ASEAN countries over the past two decades. The rapid growth of local bond markets is also increasingly important because it enables the formation of a larger and more diversified domestic investor base. ADB data show that the value of local-currency bonds in emerging East Asia reached around US$30 trillion at the end of June 2026. A positive development in regional financial markets. Nevertheless, domestic and regional markets have provided larger sources of financing, so governments are not entirely dependent on borrowing in foreign currencies.

Second,relatively adequate foreign exchange reserves. In ASEAN, foreign exchange reserve positions indicate the size of the external buffer held by each member country. In 2026, Singapore had reserves of around US$430.1 billion, Thailand US$279.2 billion, Indonesia US$145.6 billion, Malaysia US$132.6 billion, and the Philippines US$104.7 billion. Indonesia itself had foreign exchange reserves equivalent to around 5.5 months of imports in June 2026, far above the international adequacy standard of around three months of imports. With such an adequate foreign exchange reserve position, it can serve as an instrument to maintain foreign currency liquidity and help cushion market pressures. Thus, foreign exchange reserves are not merely monetary assets, but also an important part of a country's external financial buffer and financial resilience.

Third,ASEAN's economic growth remains sustained. The IMF itself projects ASEAN economic growth of around 4.3% in 2025 and 2026. This reflects ASEAN's resilience to global trade uncertainty and fairly strong external pressures. At the same time, it provides room for increasing government revenues and helps keep the debt-to-GDP ratio from rising too quickly. This is where the important role of economic growth lies, as it can serve as a strategy for managing debt.

Fourth,ASEAN's economic diversification is capable of building regional supply chains and strengthening the cohesiveness of economic integration. Take Indonesia, which has substantial natural resource content and a fairly large domestic market. Malaysia and Vietnam have relatively strong manufacturing and trade bases. Singapore is an international services and financial center. Thailand has an industrial and tourism base. The Philippines has large services and remittance sectors. Through diversification, a shock to one sector or one external market does not immediately halt the entire growth engine of the ASEAN region.