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US, EU and UK aid cuts could reduce development finance by over $2 billionUS, EU and UK aid cuts could reduce development finance by over $2 billion
Since the end of the Southeast Asia Aid Map reporting period in 2023, many major Western donors have chosen to step back from international development efforts. In 2024, seven European governments (France, Germany, the Netherlands, Sweden, Finland, Austria, and Italy) and the European Union announced $17.2 billion in f2029. Even more notable has been the reduction by the United States, with the Trump administration in early 2025 abruptly halting around $60 billion — the majority of its overseas aid. The United Kingdom followed, announcing reductions in annual ODA of around $7.6 billion.
These cuts will hit Southeast Asia hard. Between 2015 and 2023, Team Europe, the United States, and the United Kingdom together contributed about one-third of all ODA to Southeast Asia, with a particular focus on humanitarian and social sector priorities such as health, education, and civil society support.
Based on current budget documents, public announcements, and calculations by other researchers, we estimate that total ODF to Southeast Asia could decline by 8% or more than $2 billion, falling to $26.5 billion by 2026. This projection is driven by a 20% expected decline in bilateral aid (ODA) from $11.3 billion in 2023 to $9 billion in 2026, while assuming other financing flows remain stable. Bilateral aid per capita would fall from $16 to $13, or by about 22%.
For each donor, we assume ODA flows will remain steady at the level of already announced or expected cuts. The United States is expected to slash its foreign assistance by 83% in 2025. Annual ODA from Team Europe is expected to see a 20% decline. Germany, the largest EU donor, reduced its aid program by 13% in 2024, and its newly elected conservative government has indicated further cuts to public spending. France, the EU’s second-largest donor, reduced its ODA by 11% in 2024 and is on track for a possible 40% cut in 2025.
Asian donors are expected to maintain relatively stable ODA flows. Japan reduced its aid by 6% in 2024 but is expected to keep its funding steady thereafter. South Korea is projected to increase its ODA disbursements by 2% annually from 2024 onwards. Meanwhile, we expect Chinese aid to remain stable in the near future.
About the authors
Alexandre Dayant
Alexandre Dayant is a senior economist and former Deputy Director of the Indo-Pacific Development Centre, a dedicated policy research centre within the Lowy Institute.
Grace Stanhope
Grace Stanhope is a former Research Fellow in the Indo-Pacific Development Centre at the Lowy Institute, working on the Southeast Asia Aid Map. Her work focused on tracking and analysing foreign aid and development finance flows to Southeast Asia.
Roland Rajah
Roland Rajah is Lead Economist and Director of the Indo-Pacific Development Centre at the Lowy Institute, focusing on economic development challenges across Southeast Asia, the Pacific Islands, and South Asia. His research spans macroeconomics, aid and development finance, geoeconomics, and regional integration.
Hannah Buckley
Hannah Buckley was a Research Assistant at the Lowy Institute, contributing to the Southeast Asia Aid Map project.
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