Forecasting the Impact of the EU Deforestation Regulation (EUDR) on Asia-Pacific Forest Product Trade

This study provides a comprehensive, quantitative forecast of the dynamic impact of the European Union Deforestation Regulation (EUDR) on forest product exports from nine major Asia-Pacific economies to the EU market. To address the complexity of this policy shock, we develop a novel two-stage forecasting framework that integrates LASSO regression for high-dimensional variable selection with OLS modeling. This approach generates dynamic monthly projections from October 2025 to December 2027, simulating the policy’s effect by combining a historical proxy from the European Union Timber Regulation (EUTR) with a calibrated “intensity multiplier” based on the EUDR country-risk classification. Our projections reveal a distinct multi-phase adjustment process across the region: an immediate, sharp contraction in Q4 2025, followed by a period of significant volatility and supply chain disruption throughout 2026, and an uneven recovery in 2027. The findings underscore substantial heterogeneity in impacts driven by the EUDR risk-based framework. Standard-risk countries, such as Indonesia and Malaysia, are projected to face severe volatility and suppressed growth trajectories, with Malaysia’s exports showing particular vulnerability. In contrast, some smaller, low-risk nations like the Philippines may capitalize on a substitution effect, gaining market share as larger suppliers struggle with compliance. The study concludes that the EUDR acts as a powerful disruptive force, reshaping competitive dynamics and necessitating urgent policy responses, including enhanced traceability infrastructure and strategic market diversification, for Asia-Pacific exporters.