AI boom expected to ease economic downturn from Middle East crisis

Growth in developing Asian economies is expected to slow to 5.1 percent this year, from 5.6 percent in 2025, as the escalating crisis in the Middle East continues to drive up global oil prices, according to the latest World Economic Outlook released by the International Monetary Fund on Tuesday.

The biannual report — launched at the 2026 Annual Meetings of the International Monetary Fund and the World Bank Group in Bangkok — also noted that the slowdown in the region will be reined in by the rise in demand for artificial intelligence products, as several emerging Asian economies are part of the AI supply chain.

GDP growth in the two biggest Asian economies — China and India — is also expected to ease to 4.5 percent and 7.0 percent, respectively, while several Southeast Asian economies are expected to benefit from investments in data centers, the upturn in the global technology cycle, and emergency fiscal measures.

Silvana Tenreyro, IMF's director of the research department, said China and India are the "big engines of growth" in the developing Asian region.

"Overall, (the developing Asian region) is the region that has grown the most," Tenreyro said at a press briefing held at the launch of the WEO.

IMF's outlook for developing Asia has surpassed its 2026 global growth forecast of 3.1 percent, with energy-importing economies outside the technology value chain projected to face the "most difficult outlook".

Tenreyro said despite being net energy importers, the region "has been incredibly resilient", thanks to the AI boom. She noted that countries like Malaysia, Singapore, South Korea, and Vietnam, "are very well integrated in the AI supply chain".

prime@chinadailyapac.com