WASHINGTON, USA  –  Asia-Pacific is on course to remain the world’s fastest-growing major region, even as its own expansion slows. The International Monetary Fund (IMF) projects 4.8 percent growth in 2026, down from 5 percent last year but well ahead of the United States at 2.3 percent and the euro area at 1.1 percent. The global forecast of 3.1 percent is unchanged from a year ago. Behind that figure, the race to build artificial intelligence infrastructure has lifted investment and trade, while the war in the Middle East has driven up energy costs.

The chip boom reaches beyond Taiwan and South Korea

Taiwan’s economy grew 14.4 percent in the third quarter from a year earlier, according to an initial official estimate. South Korea’s exports rose 94 percent in October in dollar terms, with semiconductor shipments more than tripling in value. The gains extended to transformers and cables used in data centers. South Korea’s trade minister, Kim Jung-kwan, credited strong demand for advanced technology while warning that smaller exporters still faced an uncertain trading environment.

In Vietnam, industrial production rose 15 percent in October from a year earlier. Vietcap, a Vietnamese securities firm, attributed a record monthly trade surplus partly to electronics and machinery, while flagging weaker new export orders. Elsewhere, the drivers are different. The IMF expects India to grow 7 percent this fiscal year, supported by domestic demand and services. China is forecast to slow to 4.5 percent as weak household demand and the property downturn weigh on activity.

Strong exports, weaker signals from factories

October surveys showed manufacturing still expanding in Japan, South Korea and Taiwan, but at a slower pace. China’s official factory gauge slipped into contraction. On Nov. 6, Kristalina Georgieva, the IMF’s managing director, said central banks would need to account for any slowdown in AI-driven growth as they weighed persistent inflation. The Fund expects Asia-Pacific growth to ease to 4.4 percent in 2027 even as global growth picks up to 3.4 percent.

Faster output can mean fewer openings

The economic gains are easiest to see in orders for chips, servers and data centers. The IMF’s baseline assumes productivity growth broadly follows its existing path, even as companies adopt AI for tasks such as writing software and answering customer inquiries. In 19 Asian economies, the IMF found that online vacancies in more exposed occupations fell nearly 10 percent relative to less-exposed roles. In the United States, Stanford researchers found a widening employment gap for workers aged 22 to 25 in exposed occupations, driven mainly by weaker hiring. In Denmark, researchers found that companies reorganized work around AI while average pay and recorded hours changed little.

For Asia’s younger economies, the question is whether new jobs in technology and services will open quickly enough to offset a squeeze on the routine office and outsourcing roles that have traditionally given graduates their start. The answer will matter well beyond the chip exporters now driving the region’s growth.

Picture: AI Generated