World Bank Lifts East Asia Growth Outlook

On Tuesday, Oct. 6, 2026, CNBC Economy reported that the World Bank raised its economic growth forecast for the East Asia and Pacific region. The revision comes on the back of artificial intelligence-related exports, though the institution warned that heavy reliance on the current AI boom leaves the region vulnerable to a potential reversal in global technology spending. The region comprises 23 economies, including China, Vietnam, Indonesia, Malaysia, and Thailand.

Regional Growth Revisions and Vietnam Upgrade

The East Asia and Pacific economy is now expected to expand 4.5% this year. This figure represents an increase of 0.3 percentage point compared to the bank's April projection. Growth across the region is forecast to ease to 4.4% in 2027 and 4.3% in 2028. Among the major economies in the region, Vietnam received the largest forecast upgrade, with its projection moving up 1.1 percentage point to 7.4%. Meanwhile, Taiwan's statistics bureau recently raised its 2026 growth forecast to 11% from 9.6% on surging AI demand, though it warned in June that headwinds in the high-tech sector could create outsized negative impacts on the local economy.

Strength across the region remains highly dependent on AI-related manufacturing and exports, while trade growth excluding AI goods has been weak or negative. AI-related products accounted for more than half of export growth in most regional economies and more than 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 through April. In South Korea, official data showed that exports grew 83.5% in September to a record $120.9 billion, with computer chips making up half of those shipments. Highlighting the dominance of semiconductors in domestic markets, the World Bank noted that just two chipmakers, Samsung and SK Hynix, accounted for 43% of the benchmark Kospi index's value as of the end of April. Concurrently, South Korea's customs agency reported increased attempts to disguise foreign products as Korean exports, primarily from China, to avoid sweeping tariffs imposed by U.S. President Donald Trump.

CapEx Concentration and Private Credit Exposure

The primary risk to the region stems from the spending side of the technology sector. AI-related capital expenditure has reached about 6% of U.S. gross domestic product, a level comparable to the 2000 peak in information technology investment. The World Bank stated that the current cycle has risen faster than previous cycles and is still gaining speed. The Bank for International Settlements warned in its annual economic report in June that the scale and pace of the boom bear a resemblance to the dot-com frenzy of the 1990s and other manias, much like corporations responding to tightening credit conditions and central bank policy shifts.

Financing driving the current boom is also less transparent than in past cycles. Of the $2.9 trillion in AI capital expenditures planned for the 2025 to 2028 period, $800 billion is expected to be funded by private credit. AI-related lending within private credit rose to 34% of activity in 2025, up from an average of 18% over the prior five years. Private credit portfolios have experienced markdowns, outflows, and defaults this year, and these markets are less visible while remaining untested by a severe downturn. Furthermore, foreign-currency-denominated liabilities of banks appeared significant in certain countries, reaching 29.2% of GDP in Malaysia and 20.7% in the Philippines, mirroring vulnerabilities seen when regulatory burdens and institutional lending requirements shift across international jurisdictions.

Central Bank Tightening and Supply Chain Risks

The AI boom, which has been supported by abundant liquidity, could slow down due to the latest tightening of financial conditions. Major central banks have raised rates for the first time since 2023. The U.S. Federal Reserve raised rates in September, marking its first increase in more than three years, and signaled intentions to implement one more hike before the end of the year.

A market correction would not necessarily mean an outright bust for the broader AI supercycle, but the World Bank indicated that investment has run ahead of realized demand. A slowdown of 1 percentage point in U.S. growth typically cuts other emerging-market growth by an estimated 0.6 percentage point, with the hit to investment running about twice as large. A slowdown concentrated specifically in artificial intelligence would be material for East Asia because of the region's deep prominence in the global AI supply chain.