Haze clouds Indonesia’s growth, but economists see breathing room for Malaysia and Singapore

• Toxic smoke from fires in Sumatra and Kalimantan in Indonesia has blanketed wide swathes of South-east Asia for weeks. PHOTO: REUTERS

[SINGAPORE] Despite the widespread disruption from an unusually intense episode of transboundary haze, economists are leaving their 2026 growth forecasts for Indonesia, Malaysia and Singapore unchanged – but warn of a downside risk to Indonesia’s economy.

In contrast, growth in Malaysia and Singapore is driven by manufacturing, electronics and finance – sectors largely insulated from this year’s regional haze.

Toxic smoke from fires in Sumatra and Kalimantan in Indonesia has blanketed wide swathes of South-east Asia for weeks, with Singapore’s Pollutant Standards Index sitting in the unhealthy range since Sep 4, Malaysia closing schools in Kuala Lumpur and several states, and the air quality reaching hazardous levels in parts of Indonesia’s Central Kalimantan.