AI boom helps lift Asia growth outlook despite energy, El Nino risks: ADB

The Asian Development Bank (ADB) has raised its growth forecast for developing Asia-Pacific to 5% by 2026, up 0.1 percentage point from July's forecast. This uptick is attributed to domestic demand resilience and an AI-driven technology boom, which help protect the region from higher energy prices and an intensifying El Nino. The projection remains unchanged for 2027 at 5.1%.

However, the forecast is subject to risks from ongoing conflicts in the Middle East, Ukraine, and Yemen, which have caused energy market volatility and elevated prices. These issues are expected to continue impacting businesses, consumers, and overall economic activity. The ADB also anticipates an intensifying El Nino, which could exacerbate agricultural production challenges and inflation pressures.

Despite these headwinds, private investment, government stimulus, and robust AI technology exports are projected to support regional growth. Among Southeast Asian economies, Vietnam is expected to experience the most significant growth, with a forecast of 7.8% in 2026 and 7.6% in 2027. Malaysia, Thailand, and Indonesia are also expected to see growth improvements, though Malaysia's 2027 projection has been lowered.

The ADB's chief economist, Albert Park, believes that even if there is a short-term correction in AI investment momentum, AI will remain a significant driver of productivity gains in Asia.