The World Bank has revised its 2026 economic growth projection for East Asia and the Pacific upward, attributing the increase primarily to exports linked to artificial intelligence technologies. However, it cautions that the region remains highly susceptible to any reversal in global technology investment trends.
The World Bank’s updated forecast covers 23 economies such as China, Vietnam, Indonesia, Malaysia, and Thailand. According to the recent report released on Tuesday, growth in the region is anticipated to reach 4.5% in 2026—an increase of 0.3 percentage points from the April estimate. The expansion will moderate to 4.4% in 2027 and further to 4.3% in 2028.
Among major economies, Vietnam received the largest upward revision, with growth now anticipated at 7.4%, up by 1.1 percentage points.
Much of the region’s export momentum is concentrated in the AI sector. Outside of AI-related categories, trade performance remained marginal or negative. In most countries, over half of export growth originated from AI-linked goods, with this share surpassing 70% in Malaysia, the Philippines, Thailand, and Vietnam.
South Korea’s official statistics indicated that export value rose dramatically in September to $120.9 billion, largely due to strong semiconductor sales. The World Bank noted that the country’s largest chip companies, Samsung and SK Hynix, together made up 43% of the Kospi index’s market capitalization at the end of April.
On the global stage, the bank commented that AI capital investment has climbed to roughly 6% of U.S. GDP, paralleling the peak during the technology boom of 2000. The current pace of AI investment is more rapid than previous cycles. The Bank for International Settlements has previously observed that the vast scale and speed of the AI surge are reminiscent of past financial bubbles.
The World Bank report also highlighted that much of the financing for AI expansion remains opaque, particularly in private credit markets. It estimates that out of the $2.9 trillion in AI capital spending planned for 2025–2028, $800 billion could come from private credit, a share that grew to 34% of lending activity in 2025 from an 18% five-year average.
Monetary policy tightening is another source of risk; recent interest rate hikes by major central banks—including the first increase by the U.S. Federal Reserve since 2023—could restrain liquidity and investment in the AI sector.
If the AI investment wave moderates, the bank suggests this would not necessarily end the growth cycle, but could indicate investments are currently outpacing realized demand. Historically, a 1% drop in U.S. GDP growth would reduce emerging market expansion by 0.6 percentage points, and would have a greater effect on investments. The region’s extensive role in the AI supply chain means it would be particularly affected by a downturn in AI-related activity.
In Thailand, GDP growth reached an average of 2.4% in 2025 and rose to 2.8% year-on-year during the first quarter of 2026. Nevertheless, expansion eased to 1.9% in the second quarter. Growth was supported primarily by government stimulus, capital spending, and robust export figures, with computers and related components comprising an increasing share of total exports.
Despite these gains, Thailand’s overall manufacturing output contracted, and headline inflation accelerated from negative territory at the start of 2026 to 2.5% in August, primarily because of rising oil prices. Tourist arrivals in the first half of the year dropped to 15.9 million, lower than both the previous year and pre-pandemic levels.
The country also continues to grapple with high levels of public and private debt, as government debt approaches its legal ceiling of 70% of GDP. The bank anticipates growth in Thailand will slow to 2.0% for 2026 and pick up marginally in subsequent years, with elevated inflation and public debt remaining concerns.
