ASEAN Perspectives Twin deficits: an oil and AI race

Research evidence excerpt

ASEAN Perspectives Twin deficits: an oil and AI race

Economics ● ASEAN

29 June 2026

Chart 5. Singapore has been maintaining a Chart 6. Malaysia’s goods surplus has

super high current account surplus moderated from the previous tech upcycle

Source: CEIC, HSBC Source: CEIC, HSBC

Current account: squeezed by oil but boosted by AI?

We start our analysis with the current account balance. A quick glance in Chart 4 shows that

trade-dependent economies tend to have bigger current account surpluses. Singapore not only

enjoys the region’s largest current account surplus in absolute level terms, but also as a

percentage of its GDP (17%) in 2025 – a reflection of Singapore’s long-standing position as a

key global trading hub. On the other hand, Malaysia, Thailand and Vietnam saw much smaller

current account surpluses ranging between 2% to 6% of their respective GDP. Elsewhere,

Indonesia (-0.1%) and the Philippines (-3.5%) suffered from current account deficits, though

the former has seen it narrowing and the latter gradually being reined in after spiking in 2021.

We map out all economies’ current account positions over the years (Charts 5-6, 9-10, 13-14)

and dissect the interesting trends after the Middle East conflict. While 1Q26 data (still

unavailable in Vietnam and the Philippines) did not fully capture the impact of the energy shock,

high frequency trade data in April and May help us understand which economy benefits the

most in widening goods balance, which determines the magnitude of current account balance.

Singapore and Malaysia, the tech duo with chip foundries in ASEAN, saw wider current

account surpluses in 1Q26. The strength is likely to continue, as both are on the frontline to

benefit from the unwavering AI-related upturn, thus seeing their goods surpluses widening