World Bank upgrades East Asia and Pacific growth forecast for 2026 to 4.5%, warns of AI dependence risks

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4▲4 ▼0Impact / 5
Summary · why it matters

The World Bank has raised its economic growth forecast for the East Asia and Pacific region in 2026 by 0.3 percentage points to 4.5%, up from its April estimate, driven mainly by exports of goods related to artificial intelligence. The region covers 23 economies, including China, Vietnam, Indonesia, Malaysia and Thailand, and growth is expected to slow to 4.4% in 2027 and 4.3% in 2028. Vietnam received the largest upgrade, up 1.1 percentage points to 7.4%. The World Bank said AI-related goods contributed more than half of export growth in most countries in the region, and accounted for more than 70% of export growth in Malaysia, the Philippines, Thailand and Vietnam. China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam together exported AI-related goods worth 1.4 trillion dollars in the 12 months ending in April. Meanwhile, South Korea's exports in September rose 83.5% to a record high of 120.9 billion dollars, with chips accounting for about half of total exports, and Samsung Electronics and SK Hynix together carried a weight of 43% of the Kospi index value at the end of April. The World Bank warned that a key risk lies in AI capital spending, which has reached about 6% of US GDP, close to the peak level of information technology investment in 2000. Of the total planned AI capital expenditure of 2.9 trillion dollars between 2025 and 2028, about 800 billion dollars is expected to come from private credit markets, with the share of AI-related lending rising to 34% of all activity in 2025, compared with an average of just 18% over the previous five years. Meanwhile, the US Federal Reserve raised interest rates last September, its first hike in more than three years, and signalled it may raise rates once more this year. The World Bank estimates that if the US economy slows by 1 percentage point, growth in other emerging markets would fall by about 0.6 percentage points. Taiwan has raised its 2026 economic growth forecast to 11% from 9.6%.

Impact on assets 4

Semiconductors▲
SK Hynix Inc
000660
▲ PositiveDemandrelevance

South Korea's September exports hit a record $120.9B with chips about half of total, and SK Hynix plus Samsung carried 43% of Kospi value, reflecting strong AI-chip export demand.

Artificial Intelligence▲
Samsung Electronics Co Ltd
005930
▲ PositiveDemandrelevance

Record Korean chip-led exports and Samsung's 43% combined Kospi weight with SK Hynix point to strong AI-related semiconductor demand for Samsung.

Others▲
％Effective Federal Funds Rate
EFFR
▲ PositiveMonetaryrelevance

Article states the Fed raised rates last September, its first hike in over three years, and signalled possibly one more hike this year, pushing the policy rate yield up.