The World Bank raised its 2026 growth forecast for East Asia and the Pacific to 4.5% on Tuesday, crediting a surge in exports of artificial intelligence hardware, while warning that the region's dependence on those shipments leaves it exposed if global AI spending reverses. The bank's semiannual Economic Update, titled "Riding the AI Wave" and released in Washington on October 6, lifted the projection by 0.3 percentage point from April and sees growth easing to 4.4% in 2027 and 4.3% in 2028, CNBC reported.
Trade outside AI-related goods has been "weak or negative," the bank said. AI-related products accounted for more than half of export growth in most of the region's economies and more than 70% in Malaysia, the Philippines, Thailand and Vietnam, according to the report. China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam together shipped $1.4 trillion of AI-related goods in the 12 months through April.
Vietnam, Malaysia and Thailand get the largest upgrades
The revisions were concentrated in economies that build and export the hardware behind the AI buildout. According to the World Bank's press release, the 2026 forecast for Vietnam rose by 1.1 percentage points to 7.4%, Malaysia's by 0.7 point to 5.1% and Thailand's by 0.7 point to 2.0%. Pacific Island countries, which the bank described as particularly vulnerable to high energy prices and short of buffers against external shocks, were revised down.
China, the region's largest economy, is growing at 4.4% this year, the press release said, as domestic demand stays constrained by a soft labor market and adjustments in the property sector. The forecast table inside the report lists China at 4.5%.
| Economy | 2026 forecast | Change vs. April | 2027 forecast |
|---|---|---|---|
| East Asia and Pacific | 4.5% | +0.3 pt | 4.4% |
| Vietnam | 7.4% | +1.1 pt | 7.3% |
| Malaysia | 5.1% | +0.7 pt | 4.7% |
| Thailand | 2.0% | +0.7 pt | 2.3% |
| Indonesia | 5.2% | +0.5 pt | 5.2% |
| China | 4.5% | +0.3 pt | 4.3% |
Source: World Bank, East Asia and Pacific Economic Update, October 2026, Chapter 1 highlights. China is cited at 4.4% for 2026 in the Bank's press release.
South Korea's chip shipments show the concentration
South Korea, which does not appear in the Bank's forecast table, supplied the sharpest illustration of the pattern days earlier. Exports rose 83.5% in September from a year before to a record $120.9 billion, Reuters reported on October 1, with semiconductor shipments up 262.8% to $60.3 billion, almost half of the total. Computer exports climbed 435.3% to $7.0 billion on demand for agentic AI and AI infrastructure.
The World Bank noted that two companies, Samsung Electronics and SK Hynix, accounted for 43% of the benchmark Kospi index's value at the end of April, CNBC reported. Industry Minister Kim Jung-kwan said in a statement that the $1 trillion annual export mark is expected to be reached, but that "the strengthening of global protectionism and the tense situation in the Middle East region still remain big variables."
The risk is on the spending side
The report names three threats to the outlook: energy prices that stay elevated for a prolonged period, a slowdown in AI investment with related financial strains, and a very strong El Niño, which the bank considers highly probable. The region's place in AI supply chains "has been a source of strength thus far but could turn into a weakness if AI-related activity slows," the report said.
AI-related capital spending has reached about 6% of U.S. GDP, similar to the 2000 peak in information-technology investment, and the current cycle "has risen faster than either previous cycle and is still gaining speed," the bank said, according to CNBC. Of the $2.9 trillion in AI capital spending planned for 2025 to 2028, about $800 billion is expected to come from private credit, where AI-related lending rose to 34% of activity in 2025 from an 18% average over the previous five years. Such markets are "less visible, and have not been tested by a severe downturn," the report said.
Financial conditions are also tightening. The report notes that major central banks are raising rates for the first time since 2023, and CNBC pointed out that the U.S. Federal Reserve raised rates in September for the first time in more than three years.
A correction would not necessarily mean a bust, the bank said, but it would show that investment "had run ahead of realized demand." It estimated that a 1-percentage-point slowdown in U.S. growth cuts growth in other emerging markets by 0.6 point, with the hit to investment about twice as large. "A slowdown concentrated in AI would be material for East Asia because of the region's prominence in the AI supply chain," the report said. Bank funding is the broadest point of exposure: foreign-currency liabilities of banks equaled 29.2% of GDP in Malaysia and 20.7% in the Philippines.
Early signs of cooling
HSBC's chief Asia economist, Frederic Neumann, said in a note on Tuesday that "not only are prices for some key electronics easing, but new order and inventory data point to a pullback in demand." Shipments from Asia, including chip exports from Taiwan, have pulled back notably in both value and volume terms, he said, although the slowdown is still marginal and may prove "a mere wobble" in a multiyear surge.
Adoption lags production
A special chapter of the report found that the region manufactures far more AI hardware than it uses AI tools. In Thailand, 12% of firms report using any AI technology and 4% pay for AI software or systems, compared with 43% and 23% in the United States. Thai firms cited low expected productivity gains, costs, a lack of knowledge, and security and privacy concerns as barriers.
About 1% of online job postings in the region's developing economies require AI-related skills, against 6% in Singapore and 2% to 3% in Poland and India. In China, demand for generative AI skills has risen rapidly, especially after the release of DeepSeek, according to the report. It found no discernible effect yet on automatable jobs in the region's developing economies, in contrast with emerging evidence of negative effects in advanced economies. Only 13% of jobs in the region require the complex thinking and judgment where AI is most effective, compared with 39% in advanced economies, the bank said.
On innovation, the report ranks China, Japan and South Korea among the world's top sources of AI patents. Developing economies in the region accounted for only 1% of global AI patents from 2021 to 2024, three times the share of other emerging economies, and foreign multinationals increasingly own that limited output.
"The challenge now is to turn the region's strength in producing AI-related goods into widespread AI adoption that boosts productivity and creates more and better jobs for millions of people," said Carlos Felipe Jaramillo, the bank's vice president for East Asia and Pacific.
For most countries, the bank said, the biggest near-term gains will come from "Small AI," meaning the adoption and adaptation of existing, more accessible tools rather than the development of new models. It recommended enabling adoption through infrastructure, financing and skills, adapting AI locally with affordable tools in labor-intensive sectors such as tourism and agribusiness, and using governments' roles as AI users and regulators to improve public services.
Samsung results due Thursday
The next data point arrives on Thursday, October 8, when Samsung Electronics is due to publish preliminary third-quarter results. Reuters reported that the LSEG SmartEstimate, drawn from 21 analysts, stands at 106.1 trillion won ($79.1 billion) in operating profit, up from 12.17 trillion won a year earlier, although analysts have cut forecasts by 7.7% since the end of August.
The trimming reflects slower memory price gains. TrendForce expects conventional DRAM contract prices to rise 10% to 15% in the fourth quarter from the third, down from a surge of roughly 60% in the second quarter, according to Avril Wu, the research firm's senior vice president.