WORLD BANK RAISES EAST ASIA GROWTH FORECAST TO 4.5% FOR 2026

The World Bank has raised its growth forecast for the East Asia and Pacific region to 4.5% for 2026, according to a report released on Tuesday. The upgrade is 0.3 percentage points higher than the bank's April projection. The region covers 23 economies, including China, Vietnam, Indonesia, Malaysia and Thailand. Vietnam received the largest upgrade among major economies, with its forecast raised by 1.1 percentage points to 7.4%. The bank said growth is expected to ease to 4.4% in 2027 and 4.3% in 2028. It attributed the improved outlook largely to exports of artificial intelligence-related goods.

The World Bank said AI-related goods accounted for more than half of export growth in most regional economies, and over 70% in Malaysia, the Philippines, Thailand and Vietnam. China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam shipped $1.4 trillion of AI-related goods in the 12 months to April, according to the report. Trade growth excluding AI-related goods was described by the bank as weak or negative. Official figures showed South Korea's exports grew 83.5% in September to a record $120.9 billion, with semiconductors making up half of the total. The bank noted that two South Korean chipmakers, Samsung and SK Hynix, made up 43% of the value of the Kospi stock index as of the end of April.

The bank said the region's reliance on AI-driven trade leaves its growth outlook exposed to any reversal in global technology spending. It added that such spending is expected to be partly financed by $800 billion of private credit. A reversal, the bank said, would remove what it called "a key pillar" supporting the region's growth. Its forecasts run through 2028, by which point regional growth is projected to slow to 4.3%.