World Bank: East Asia's growth boom is really an AI export boom
The bank raised its regional growth forecast on AI-driven exports, but warned the same boom leaves economies exposed if global AI spending slows.
What happened: The World Bank raised its growth forecast for East Asia and the Pacific to 4.5% for this year, up from its April estimate, pointing to a surge in AI-related exports across the region's 23 economies. Vietnam got the biggest upgrade, to 7.4%. But the bank paired the good news with a blunt warning: strip out AI-linked goods, and trade growth in the region has been weak or negative. Six economies shipped $1.4 trillion worth of AI-related products in the year through April, and those goods drove more than half of export growth in most countries, over 70% in Malaysia, the Philippines, Thailand and Vietnam.
Why it matters: A regional economy built this heavily on one category of exports is a bet on the AI spending cycle continuing uninterrupted. South Korea's September exports hit a record $120.9 billion, half of it chips, and just two companies, Samsung and SK Hynix, now make up 43% of the country's stock index. The World Bank's own comparison is uncomfortable: AI capital spending has reached about 6% of U.S. GDP, matching the peak of the dot-com-era tech investment boom, and it's still accelerating rather than leveling off.
How it works, plainly: Much of the money fueling AI data centers and chip factories isn't coming from ordinary bank loans or public markets, it's private credit, a less regulated corner of finance. Of $2.9 trillion in planned AI capital spending through 2028, $800 billion is expected to come from private credit, which jumped to 34% of all private-credit activity in 2025 from an 18% average in prior years. That market has already seen markdowns, investor withdrawals and defaults this year, and the World Bank notes it has never been stress-tested by a real downturn.
The rollout: Central banks are now tightening rather than loosening, with the Fed raising rates last month for the first time in over three years and signaling another hike. The World Bank estimates a 1-point slowdown in U.S. growth knocks 0.6 points off emerging markets generally, with investment hit twice as hard, and a slowdown concentrated in AI would hit East Asia harder still given its position in the supply chain. Bank exposure to foreign-currency debt is notable in Malaysia (29.2% of GDP) and the Philippines (20.7%). Taiwan, meanwhile, raised its 2026 forecast to 11% on AI demand, while admitting a tech downturn could hurt more than expected.