East Asia and Pacific’s 4.5% Growth Forecast Puts AI Exports and Better Jobs in Focus

Manufacturing and exports of high-tech goods supporting global AI activity have helped drive stronger-than-expected growth in several countries.

East Asia and Pacific is projected to grow by 4.5% in 2026, showing resilience against global economic pressures as demand for high-tech goods helps several economies outperform earlier expectations. The World Bank's latest twice-yearly regional Economic Update finds that growth remains uneven across countries and sectors, with the global surge in AI-related activity creating fresh opportunities for manufacturers and exporters. Its assessment connects the region's near-term outlook with a wider question about how AI adoption can improve productivity, incomes and employment across the economy.

High-tech exports lift forecasts across several economies

Manufacturing and exports of high-tech goods supporting global AI activity have helped drive stronger-than-expected growth in several countries. Viet Nam's 2026 forecast has been raised by 1.1 percentage points to 7.4%, Malaysia's by 0.7 percentage points to 5.1%, and Thailand's by 0.7 percentage points to 2.0%. These upgrades reflect the benefits available to economies supplying the goods behind expanding AI investment, with their participation in global production networks supporting economic activity.

China, the region's largest economy, is growing at 4.4%, with domestic demand constrained by a soft labour market and continuing adjustments in the property sector. Pacific Island countries face a more difficult outlook, growing at 2.2%, which is 0.5 percentage points below the earlier forecast. Their vulnerability to high energy prices and limited financial buffers against external shocks illustrate the different pressures within the region, where stronger technology-linked exports coexist with weaker demand and exposure to imported costs.

Wider AI adoption depends on access and changing skills

Carlos Felipe Jaramillo, the World Bank's Vice President for East Asia and Pacific, said the region's economic dynamism and deep integration into global value chains have positioned it to benefit from rising AI-related activity. He stressed the importance of turning its strength in producing AI-related goods into broader adoption that raises productivity and creates more and better jobs. Adoption among individuals and firms is increasing from levels below those in advanced economies, with high costs, limited expertise, and security and privacy concerns restricting its reach.

For most countries, the biggest near-term opportunity lies in "Small AI", through adopting existing technologies and adapting accessible tools to practical needs. AI has not significantly affected jobs that could be automated, and its influence is already visible in employers' demand for AI expertise alongside analytical abilities and social skills. The technology is most effective in supporting work involving complex thinking and judgment, a category accounting for only 13% of jobs in the region compared with 39% in advanced economies.

Private investment and local tools could spread the benefits

Sarvesh Suri, IFC's Regional Vice President for Asia and the Pacific, highlighted the private sector's role in turning AI's potential into better employment opportunities. Mobilising private capital for digital and energy infrastructure, expanding business financing and investing in workforce skills could accelerate adoption and help small firms become more competitive, dynamic and resilient. The report's recommendations place these investments alongside a strong business environment, giving workers and companies the foundations needed to use AI effectively.

Locally adapted, affordable tools in local languages could extend AI's usefulness to sectors such as tourism and agribusiness, which can employ large numbers of people across skill levels. Governments have a central role as both users and regulators, applying AI to improve public services and strengthening digital foundations, regulations and regional cooperation. The report brings these priorities together around enabling adoption, adapting technology to local employment needs and improving public institutions, linking wider AI use with sustained growth and more productive jobs.