World Bank warns of AI concentration risks as it lifts East Asia and Pacific growth outlook to 4.5%

The World Bank has raised its growth forecast for East Asia and the Pacific to 4.5% for 2026, up from its April projection, with the upgrade supported by artificial intelligence-related goods. It expects expansion to ease to 4.4% in 2027 and 4.3% in 2028, implying the current momentum is not expected to persist at the same pace.

However, the report warns that the region’s strength is highly dependent on AI-linked manufacturing and exports. It says trade growth excluding AI-related goods has been weak or negative, and that AI-related products account for more than half of export growth in most economies, and over 70% in Malaysia, the Philippines, Thailand and Vietnam. For China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, the report cites $1.4 trillion of AI-related goods shipped in the 12 months through April.

The central risk is the spending side. The World Bank points to $2.9 trillion of planned AI capex for 2025-2028, with $800 billion expected from private credit, and notes that AI lending activity has risen while private credit markets are described as less visible and not tested by a severe downturn. It also connects the possibility of slower AI investment to tighter financial conditions as major central banks have raised rates, and highlights that a slowdown in US growth would propagate into emerging-market growth.

For FX markets, the key watch is whether AI-capex financing conditions tighten further or if AI demand disappoints—outcomes that could affect export earnings, regional growth expectations and credit risk premia for the currencies most exposed to AI supply chains.