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Why the World Bank Raised East Asia’s 2026 Growth Forecast to 4.5%
The World Bank raised developing East Asia and Pacific’s 2026 growth forecast from 4.2% to 4.5%, largely on stronger AI related exports and high tech investment; 2027 is forecast at 4.4%, with reliance on the AI boom... Vietnam and Malaysia are among the clearest beneficiaries, while Thailand’s forecast is 2.0% and...
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Key takeaways
- The World Bank raised developing East Asia and Pacific’s 2026 growth forecast from 4.2% to 4.5%, largely on stronger AI related exports and high tech investment; 2027 is forecast at 4.4%, with reliance on the AI boom...
- Vietnam and Malaysia are among the clearest beneficiaries, while Thailand’s forecast is 2.0% and Pacific Island economies face pressure from high energy costs.
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The World Bank lifted its 2026 growth forecast for developing East Asia and Pacific to 4.5%, up from 4.2%, as high-tech investment and exports tied to the global AI boom proved stronger than expected. It forecasts growth of 4.4% in 2027. The upgrade is uneven: economies supplying AI-related goods benefit, while high energy costs weigh on others—and concentrated reliance on technology demand creates a downside risk.2
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Why the 2026 forecast rose
The revision reflects the region’s participation in global AI supply chains. Manufacturing and exporting high-tech goods, alongside investment connected to the AI boom, helped lift growth in some economies more than expected.2
4 That boost helps explain the stronger 2026 outlook, but it does not mean every economy shares equally in the gains.
The distinction between producing AI-related goods and adopting AI across local businesses also matters. AI use is increasing in East Asia and Pacific, but remains below levels in advanced economies, according to the World Bank.1
How the outlook differs by economy
- Vietnam: The World Bank’s 2026 growth forecast is 7.4%, following an upward revision of 1.1 percentage points. The country is among the region’s major exporters of AI-related products.
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- Malaysia: The 2026 forecast rose from 4.4% to 5.1%, with AI-related exports and investment contributing to the upgrade. That also leaves growth more exposed if global demand for technology products weakens.
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- Thailand: Growth is forecast at 2.0% in 2026. AI-related exports and investment provide support, but higher energy costs and disruption to tourism and trade weigh on the outlook.
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- China: The sources available here do not establish a comparable revised 2026 forecast for China in the October update. It would be misleading to assign a specific figure or revision without that evidence.
- Pacific Island economies: Their outlook is weaker as high energy costs weigh on growth. One report gives a 2026 forecast of 2.2%, below the previous projection.
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The risks behind the upgrade
Reliance on AI-related demand. When a larger share of export growth depends on AI-related goods, a slowdown in global technology spending could weaken exports and investment. The World Bank describes the growth boost as an opportunity with downside risks, rather than a guaranteed source of lasting growth.11
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Energy costs and fiscal pressure. High energy costs are a particular burden for Pacific Island economies. Governments may use subsidies to cushion fuel-price increases, but such measures can put pressure on public and external buffers; they do not remove the underlying cost of imported energy.2
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A gap between AI exports and local use. Exporting AI-enabling products does not automatically raise productivity across domestic firms. The World Bank says AI adoption in the region is growing but remains below advanced-economy levels, leaving room to broaden the benefits beyond export industries.1
What the World Bank recommends
The policy challenge is to turn a temporary external demand boost into broader, more durable growth. The World Bank points to reliable energy and digital infrastructure, stronger skills, and wider access to AI tools. It highlights “Small AI”—more accessible tools that firms can adapt to particular tasks—as a practical route for many economies, alongside participation in AI supply chains.1
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That approach addresses both sides of the forecast: it can help local businesses capture more productivity gains, while reducing dependence on a narrow set of AI-related exports and investment.
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The World Bank raised developing East Asia and Pacific’s 2026 growth forecast from 4.2% to 4.5%, largely on stronger AI related exports and high tech investment; 2027 is forecast at 4.4%, with reliance on the AI boom...
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The World Bank raised developing East Asia and Pacific’s 2026 growth forecast from 4.2% to 4.5%, largely on stronger AI related exports and high tech investment; 2027 is forecast at 4.4%, with reliance on the AI boom... Vietnam and Malaysia are among the clearest beneficiaries, while Thailand’s forecast is 2.0% and Pacific Island economies face pressure from high energy costs.
Sources
documents1.worldbank.orgEast Asia & Pacific Economic Update