The World Bank has raised its 2026 growth forecast for developing East Asia and the Pacific, saying that exports of goods tied to the global artificial intelligence (AI) boom have more than offset the drag from high energy prices. Its October 2026 East Asia and Pacific Economic Update, released in Washington on 6 October, projects regional growth of 4.5% this year.

The gains are uneven, however. Viet Nam, Malaysia, Thailand and Indonesia were all revised up. The Philippines, Cambodia and the Pacific Island economies are being held back by fuel costs and weak tourism.

The headline numbers

The 4.5% forecast for 2026 compares with 4.2% in the World Bank's April 2026 update. In April the Bank had warned that an energy shock would slow the region from 5.0% growth in 2025.

The report, whose theme is "Riding the AI Wave", expects growth to average 4.4% a year over 2026–28. Trade publication ICIS reported the year-by-year path as 4.4% in 2027 and 4.3% in 2028.

China, the region's largest economy, is growing at 4.4%, the press release said, because "domestic demand remains constrained by a soft labor market" and by ongoing adjustments in the property sector. That is above the 4.2% China forecast in April. One ICIS report put the Bank's new China figure at 4.5%. NDNews uses the 4.4% given in the World Bank's own release.

Country forecasts

Economy 2026 forecast Change vs previous World Bank forecast 2027 forecast
East Asia and Pacific (developing) 4.5% +0.3 pt (from 4.2%) 4.4%
China 4.4% +0.2 pt (from 4.2%) n/a
Viet Nam 7.4% +1.1 pt (from 6.3%) 7.3%
Indonesia 5.2% +0.5 pt (from 4.7%) 5.2%
Malaysia 5.1% +0.7 pt 4.7%
Philippines 3.7% unchanged 5.2%
Cambodia 3.5% lowered 4.0%
Thailand 2.0% +0.7 pt n/a
Pacific Island countries 2.2% −0.5 pt n/a

Sources: the World Bank press release (region, China, Viet Nam, Malaysia, Thailand and the Pacific); the April 2026 press release (April regional and China figures); ICIS (regional 2027; Viet Nam previous forecast); Viet Nam News (Viet Nam 2027); Antara (Indonesia); Malay Mail (Malaysia 2027); The Philippine Star (Philippines); The Star (Bernama-Xinhua) (Cambodia). "n/a" means NDNews could not confirm the figure from accessible sources.

Indonesia: steadier than expected

Indonesia's 2026 forecast rose to 5.2% from 4.7% in April, and the Bank expects the same rate in 2027, Antara reported. The upgrade reflects a smaller-than-expected hit from energy prices. Franziska Ohnsorge, the World Bank's chief economist for Asia, told a virtual media briefing that domestic demand was the economy's main strength, according to Antara.

The report also warns that the policy mix has supported short-term growth while widening fiscal and external imbalances, Bisnis Indonesia reported. It projects the current-account deficit to widen to 1.5% of GDP this year and inflation to stay near the top of Bank Indonesia's target range. For how Indonesia stacks up against a slower neighbour, see our Indonesia vs Thailand economy comparison.

The AI wave and its limits

The Bank credits the upgrades to the global surge in AI-related activity. According to ICIS's summary of the report, AI-related goods made up more than 70% of export growth in Malaysia, the Philippines, Thailand and Viet Nam. ICIS also reported that China, Indonesia, Malaysia, the Philippines, Thailand and Viet Nam together exported about US$1.4 trillion of such goods between May 2025 and April 2026.

"Malaysia is really riding the AI wave," Apurva Sanghi, the World Bank's lead economist for Malaysia, said at a media briefing on the report, according to Malay Mail. He also warned that a slowdown in global AI investment could hit the country hard.

The report argues that AI's influence is unmistakable in the region's industrial sector but less apparent in the rest of the economy. Adoption is below advanced-economy levels. Only 13% of jobs in the region involve the complex thinking and judgment the Bank links to AI gains, compared with 39% in advanced economies.

"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," said Carlos Felipe Jaramillo, World Bank Vice President for East Asia and Pacific, in the press release.

The release sets out three areas for action: enabling adoption through infrastructure, finance and skills; adapting AI locally, including affordable local-language tools for sectors such as tourism and agribusiness; and using government both as an AI user and as a regulator.

Who is being left behind

The Philippines is the clearest exception. The Bank kept its 2026 forecast at 3.7% and its 2027 forecast at 5.2%, and expects inflation to average 5.8% this year. "The Philippines is the outlier in East Asia," Ohnsorge said, The Philippine Star reported on 7 October. "It is less integrated in these global AI-related value chains than countries like Vietnam and Malaysia are."

Cambodia's growth is forecast to slow to 3.5% in 2026 from 5.3% in 2025, a downgrade the Bank attributes to falling international arrivals and remittances and to higher oil prices squeezing household incomes. The Pacific Island economies, which are highly exposed to energy prices and have limited buffers, are now expected to grow 2.2%. That is half a point below the previous forecast.

The report's main downside risks are energy prices staying high for longer, a slowdown in AI investment with related financial strains, and damage from a severe El Niño. Our explainer on the Middle East war's impact on Asian economies covers that shock in more detail.

How other forecasters compare

The other major forecasters use different regional groupings, so their figures are not directly comparable with the World Bank's.

  • Asian Development Bank (ADB): The Asian Development Outlook September 2026, released on 23 September, forecasts 5.0% growth in 2026 and 5.1% in 2027 for the whole of developing Asia and the Pacific, including South Asia. For Southeast Asia it forecasts 4.7% and 4.9%, both 0.1 points higher than in July. ADB President Masato Kanda said: "The region has remained resilient, but the risks are growing."
  • International Monetary Fund (IMF): The October 2026 World Economic Outlook, released in Bangkok on 13 October, projects 5.1% growth in 2026 and 4.9% in 2027 for emerging and developing Asia, up from 5.0% and 4.8% in the July update. It trimmed China to 4.5% and 4.0% (from 4.6% and 4.1%) and raised the ASEAN-5 to 4.4% for 2026 (from 4.1%), leaving 2027 at 4.3%. For Indonesia, the IMF projects 5.1% in both years, against 5.0% and 5.1% in July, IDX Channel and The Philippine Star reported.

On Indonesia, the World Bank's 5.2% forecast for 2026 is slightly above the IMF's new 5.1%. On China, the IMF's 4.5% is just above the World Bank's 4.4%.

What to watch

  • Annual Meetings: With the IMF's October outlook now out, the IMF–World Bank Annual Meetings continue in Bangkok until 18 October.
  • AI demand: Any cooling in global AI capital spending would hit Viet Nam, Malaysia and Thailand first.
  • Energy and El Niño: The Philippines, Cambodia and the Pacific are the most exposed to oil prices and a severe El Niño.
  • Indonesia's balances: Watch the current-account deficit and inflation against Bank Indonesia's target range as fiscal support fades.

Key numbers

  • 4.5%: World Bank forecast for developing East Asia and Pacific growth in 2026, up from 4.2% in April
  • 5.2%: Indonesia's forecast for both 2026 and 2027, up from 4.7% for 2026
  • 7.4%: Viet Nam's 2026 forecast, the highest in our table, raised by 1.1 points
  • 3.7%: Philippines 2026 forecast, unchanged
  • 2.2%: Pacific Island countries 2026 forecast, down 0.5 points
  • 13% vs 39%: share of jobs involving complex thinking and judgment in the region vs advanced economies

This article was researched with AI assistance and reviewed by the NDNews editorial team. It is based on official data and media reports as of 14 October 2026.