The World Bank has upgraded its growth forecast for the East Asia and Pacific region to 4.5% in 2026, driven largely by surging demand for artificial intelligence-related goods.
The revised figure represents a 0.3 percentage point increase from the bank’s April projection, with growth expected to ease gradually to 4.4% in 2027 and 4.3% in 2028.
The region covers 23 economies, including China, Vietnam, Indonesia, Malaysia and Thailand, all of which have benefited significantly from the global AI investment wave.
Vietnam received the largest forecast upgrade among major regional economies, with its outlook raised by 1.1 percentage points to 7.4%, reflecting its growing role in the AI supply chain.
AI-related goods accounted for more than half of export growth in most of the region’s economies, with that share exceeding 70% in Malaysia, the Philippines, Thailand and Vietnam.
China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam combined shipped $1.4 trillion worth of AI-related goods in the 12 months through April, underlining the scale of the sector’s contribution.
Trade growth excluding AI-related goods has been “weak or negative,” the bank said, highlighting how narrowly concentrated the region’s economic strength has become.
South Korea’s exports grew 83.5% in September to a record $120.9 billion, with semiconductors accounting for half of all shipments, making the country acutely exposed to any tech downturn.
The World Bank noted that just two chipmakers, Samsung and SK Hynix, accounted for 43% of the benchmark Kospi index’s value as of end-April, illustrating the outsized influence of semiconductors on the market.
AI-related capital expenditure has reached approximately 6% of US GDP, a level comparable to the peak in information-technology investment seen in 2000, and the current cycle “has risen faster than either previous cycle and is still gaining speed,” the bank warned.
Of the $2.9 trillion in AI capital expenditure planned for 2025 to 2028, $800 billion is expected to be financed through private credit, where AI-related lending rose to 34% of activity in 2025 from an 18% average over the prior five years.
Private credit markets are “less visible, and have not been tested by a severe downturn,” the bank said, raising concerns about systemic risks that remain difficult to monitor or quantify.
The Bank for International Settlements, in its annual economic report in June, warned that the boom’s scale and pace bears resemblance to the dot-com frenzy of the 1990s and other “manias,” adding weight to the World Bank’s concerns.
Major central banks raising rates for the first time since 2023 could further slow the AI boom, with the US Federal Reserve having raised rates last month and signalled one more hike this year.
A slowdown of 1 percentage point in US growth cuts other emerging-market growth by an estimated 0.6 percentage point, with the hit to investment about twice as large, the World Bank said.
“A slowdown concentrated in AI would be material for East Asia because of the region’s prominence in the AI supply chain,” the bank stated, underlining the structural vulnerability that underpins its warning.
Taiwan’s statistics bureau recently raised its 2026 growth forecast to 11% from 9.6% on AI demand, while cautioning that “if the high-tech sector faces headwinds, the negative impact on the local economy could be bigger than expected.”