Vietnam is sprinting while Thailand is stumbling. That is the clearest way to read Southeast Asia's second-quarter growth numbers, and the gap between the region's best and worst performers keeps widening.
The reason comes down to a simple split. Nations whose businesses are central to AI-driven manufacturing are holding up, whereas countries that rely heavily on costly energy imports are feeling the pinch. The Middle East conflict is driving up oil prices, and that is hitting some economies much harder than others.
Second-quarter figures show Vietnam again led the region's largest economies in growth. Thailand was the laggard of the group.
The next two spots went to Malaysia and Singapore. Both countries are benefiting from strong appetite for chips and other parts that go into global tech supply chains. Singapore even raised its 2026 economic growth forecast earlier in August, with the AI boom boosting trade and manufacturing enough to offset the economic hit from the Middle East conflict.
On the flip side, Thailand and the Philippines are more exposed to higher energy costs flowing from the Middle East conflict. The Philippines also took a hit from a sharp pullback in infrastructure spending, and it now has the highest inflation in the region.
"Growth diverged across countries, dictated by the degree of domestic resilience in the face of the Middle East crisis and the share of exposure to technology exports," said DBS Group Holdings economists Chua Han Teng and Radhika Rao.
The regional split shows Southeast Asia is emerging as a key manufacturing export destination that could substitute for China, but the benefits are spreading unevenly. Countries whose firms are essential to AI-related tech supply chains have held up better, while those more dependent on pricey imported energy have seen momentum fade.
According to a statement from Singapore's Ministry of Trade and Industry, "The global AI investment boom has been stronger than expected." The statement added that "for the rest of the year, a further acceleration in AI-related capital expenditure is expected to lift the growth prospects of economies plugged into the global technology value chain."
Policymakers across the region are now working to protect firms and households from fluctuating oil prices without sacrificing economic growth. It is a delicate balancing act, and the pressure is not letting up anytime soon. The divergence is also a reminder that Southeast Asia is not a monolith; each country's exposure to global trade, energy prices, and technology cycles determines its trajectory.
This divide is not just a short-term reaction to the conflict. It reflects deeper structural differences in how each economy is integrated into global supply chains. Vietnam has become a hub for assembling electronics, drawing firms that once relied on China.
Malaysia and Singapore have carved out niches in chip packaging and high-end manufacturing. Thailand, by contrast, has struggled to move beyond auto manufacturing and tourism, leaving it more exposed to fuel costs. The Philippines, meanwhile, faces a double whammy of high energy prices and reduced government spending on infrastructure, which had been a key growth driver.
This two-speed dynamic is not entirely new. For over a decade, Southeast Asia has been positioning itself as an alternative manufacturing hub to China, drawing investment in electronics, semiconductors, and assembly operations. The current AI boom has accelerated that shift, but it has also made the region more sensitive to swings in global tech demand and energy markets. Countries that managed to diversify their export bases and build domestic resilience are weathering the storm better than those still reliant on energy-intensive industries or tourism.
Growth rates are expected to keep diverging as long as the Middle East conflict continues and the world's appetite for AI hardware remains strong.
The AI boom is not just a story about American chip giants anymore. It is reshaping which Southeast Asian economies win and which ones struggle, and that is a shift worth watching closely. Even as the region's fortunes diverge, the underlying forces - technology demand and energy costs - remain the twin drivers of this uneven expansion. Southeast Asia's ability to adapt to these pressures will determine whether the current split becomes a lasting structural feature or a temporary phase.