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AI exports lift growth forecast

The World Bank has raised its 2026 growth forecast for the East Asia and Pacific region, which covers 23 economies, to 4.5%. In a report released Tuesday, the 0.3-point upgrade from April’s estimate was driven by AI-linked production and exports.

The bank expects growth in the region to ease to 4.4% in 2027 and to 4.3% in 2028. Among major economies, the largest upward revision was for Vietnam, whose 2026 growth forecast was lifted by 1.1 points to 7.4%.

  • 2026 growth forecast: 4.5%
  • 2027 growth forecast: 4.4%
  • 2028 growth forecast: 4.3%
  • New forecast for Vietnam: 7.4%

Most of the export gain came from AI products

The report said trade growth remained weak in many countries, and in some economies even turned negative, when AI-related products were excluded. AI-linked products accounted for more than half of export growth in most economies in the region, rising to more than 70% in Malaysia, the Philippines, Thailand and Vietnam.

Total shipments of AI-related goods by China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam over the 12 months to April reached $1.4 trillion. The figure underscores the region’s growing weight in the global technology supply chain, while also deepening its dependence on a single demand theme.

Warning for markets: a slowdown in tech spending could raise risks

The World Bank said the main vulnerability lies on the spending side. According to the report, AI-linked capital spending in the US has reached about 6% of GDP, close to the peak of information-technology investment seen in 2000. The bank said the current investment cycle is rising faster than in previous periods.

Of the total $2.9 trillion in AI investment planned for 2025-2028, $800 billion is expected to come from private credit. The report also showed that AI-linked lending accounted for 34% of the private credit market in 2025, up from an average of 18% over the previous five years. This segment saw markdowns, fund outflows and defaults during the year.

Rate hikes and bank balance sheets could add pressure

The return of rate hikes by major central banks for the first time since 2023 is emerging as a factor that could slow the AI cycle supported by abundant liquidity. The Fed (US central bank) raised rates last month for the first time in more than three years and signaled that another hike could come before year-end. According to the World Bank, a 1-point slowdown in US growth could reduce growth in other emerging economies by about 0.6 points; the impact on investment could be roughly twice as large.

Chip concentration and financial exposure come into focus

The report also examined how technology concentration is affecting markets. South Korea’s September exports jumped 83.5% year on year to a record $120.9 billion, with chip shipments making up half of the total. The World Bank noted that, as of the end of April, Samsung and SK Hynix together accounted for 43% of the Kospi index’s value, highlighting concentration risk in capital markets.

Banking exposure was flagged as another vulnerability. In some countries, banks have high foreign-currency liabilities, reaching 29.2% of GDP in Malaysia and 20.7% in the Philippines. Taiwan also lifted its 2026 growth forecast to 11% from 9.6% on AI demand, but warned that a downturn in the high-tech sector could hit the domestic economy more than expected.

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