WASHINGTON — East Asia and Pacific (EAP) is projected to grow at 4.5% in 2026, demonstrating resilience in the face of global headwinds.
Growth remains uneven across economies and sectors, while growing adoption of Artificial Intelligence (AI) is creating new opportunities, according to the latest bi-annual Economic Update for the region.
The report examines both the region’s near-term economic prospects and the transformative—even if still unevenly distributed—role of AI in shaping its future workforce and economies.
Across the region, several economies have grown more quickly than anticipated in 2026, propelled by the manufacture and export of high-tech goods that have underpinned a global surge in AI-related activity. The growth forecast for 2026 has been revised up by 1.1 percentage point to 7.4% for Viet Nam, by 0.7 percentage point to 5.1% for Malaysia, and by 0.7 to 2.0% for Thailand.
Pacific Island countries—particularly vulnerable to high energy prices and with limited buffers against external shocks—are growing at 2.2%, a 0.5 percentage point slower than previously anticipated. China, the region’s largest economy, is growing at 4.4% as domestic demand remains constrained by a soft labor market and ongoing adjustments in the property sector.
“East Asia and Pacific’s deep integration into global value chains and economic dynamism have positioned the region to benefit from the surge in global AI-related activity,” said Carlos Felipe Jaramillo, World Bank Vice President for East Asia and Pacific.
“The challenge now is to turn the region’s strength in producing AI-related goods into widespread AI adoption that boosts productivity and creates more and better jobs for millions of people. If countries act boldly now, AI can become a powerful engine for opportunity, rising incomes, and a more prosperous future for all.”
In a special analysis on AI in the region, the report finds that several economies are benefiting from supplying the goods that underpin the global surge of AI investment, but the technology’s reach across the wider economy remains uneven.
Adoption among individuals and firms is rising, yet still trails advanced economies, as businesses grapple with high costs, limited expertise, and security and privacy concerns. For most countries, the biggest near-term gains will come from “Small AI”: adopting and adapting existing technologies, particularly more accessible AI tools.
“The private sector can play a central role in translating AI’s promise into more and better jobs across East Asia and Pacific,” said Sarvesh Suri, IFC Regional Vice President for Asia and the Pacific.
“By mobilizing private capital for digital and energy infrastructure, expanding financing for businesses, and investing in workforce skills, countries can accelerate AI adoption across the economy while helping small firms become more competitive, dynamic, and resilient.”
AI has yet to significantly impact automatable jobs, but it is already reshaping skills demand. Firms increasingly seek AI expertise alongside analytical abilities and social skills. AI is most effective at supporting jobs that require complex thinking and judgment, yet only 13% of jobs in the region fall into this category compared to 39% in advanced economies.
To sustain growth and foster more productive jobs, the report recommends bold action in three areas:
- Enable AI adoption, through a strong business environment, energy and digital infrastructure, financing, and skills that allow workers to benefit from AI.
- Adapt AI locally to create better jobs, using affordable local language tools in sectors that can employ workers at scale and all skill levels, such as tourism and agribusiness.
- Harness the key role of governments as AI users and regulators to improve public services, digital foundations, regulations, and regional cooperation.
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