Aid from traditional bilateral partners has further to fall

Aid cuts by traditional bilateral development partners, including Japan and South Korea, are projected to reduce ODF by another $1.76 billion in 2025. Greater transparency and coordination will help limit a reversal in development progress and erosion of trust in partners

Traditional bilateral development partners are stepping back from spending as domestic politics and fiscal pressures push budgets towards defence and national security. The Organisation for Economic Co-operation and Development (OECD) reports that 2024 was the first time in nearly 30 years that France, Germany, the United Kingdom, and the United States all cut their official development assistance (ODA) in the same year.¹

Eleven traditional bilateral development partners (Austria, Belgium, Finland, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland, the United Kingdom, and the United States) have publicly announced ODA cuts for the period 2025–27. These countries account for nearly three-quarters of global bilateral ODA by traditional partners. However, they only represent 41% of ODA spending in Southeast Asia by OECD Development Assistance Committee (DAC) members, suggesting the impact from the announced cuts may be more muted.

Based on OECD preliminary data for 2025, we estimate bilateral ODA for Southeast Asia to fall by at least a further $1.76 billion (19.6%) from traditional donor countries.² Our forecast suggests Southeast Asia will be less exposed than the global average, where the OECD reports a 23.3% decline for 2025.³ Given the current make-up of the ODA received from traditional donors, we expect Vietnam, Timor-Leste, and Thailand to be the most severely affected by these continued cuts.

Asian donors, previously expected to counterbalance Western aid cuts, are also set to reduce their development support in 2025. OECD preliminary figures suggest Japan’s regional spending will fall by a further 14.9%, and South Korea’s by 5.8%. South Korea has also confirmed a cut of approximately 16.5% to its 2026 ODA budget and a pivot towards Africa, with Asia’s share falling by 3 percentage points to 30.4% and Africa’s share rising by 5.5 percentage points to 24%.⁴

Further reductions are likely as many traditional development partners are only partway through multi-year cuts to their aid budgets. But better information sharing and coordination among donors can reduce uncertainty and cushion the impact on recipient countries. Abrupt and uncoordinated cuts risk reversing development gains and eroding trust that partners will deliver on recipient priorities.