East Asia and the wider Pacific is on track to grow by 4.5% in 2026 despite global headwinds, the World Bank reported on October 6 in its twice-yearly economic update for the region.

Several of the region's economies are outperforming earlier forecasts on the back of high-tech manufacturing and exports that feed the worldwide boom in artificial intelligence (AI) activity. The report found that the gains are spread unevenly across countries and sectors. The lender said bold reforms in infrastructure, skills and policy would be needed to keep growth going and to convert AI's promise into jobs.

Viet Nam saw the largest upgrade. Its 2026 growth forecast was raised by 1.1 percentage points to 7.4%. Malaysia's projection rose by 0.7 percentage points to 5.1%, and Thailand's increased by the same margin to 2.0%.

Other parts of the region are lagging, however. Pacific Island countries, which are exposed to high energy prices and have thin protection against external shocks, are expanding at 2.2%, which is 0.5 percentage points below earlier expectations. China, the region's biggest economy, is growing at 4.4%. A weak jobs market and continuing adjustment in the property sector are holding back domestic demand there.

"East Asia and Pacific's deep integration into global value chains and economic dynamism have positioned the region to benefit from the surge in global AI-related activity," said Carlos Felipe Jaramillo, World Bank Vice President for East Asia and Pacific. "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. If countries act boldly now, AI can become a powerful engine for opportunity, rising incomes, and a more prosperous future for all."

A special section of the report found that use of AI by individuals and companies is increasing but remains behind levels in advanced economies. Businesses cite high costs, a shortage of expertise, and worries over security and privacy. The World Bank said most countries stand to gain most in the near term from "Small AI", which involves adopting and adapting existing and more accessible tools.

"The private sector can play a central role in translating AI's promise into more and better jobs across East Asia and Pacific," said Sarvesh Suri, IFC Regional Vice President for Asia and the Pacific.

According to the report, AI has not yet made a major dent in automatable jobs, though employers increasingly want AI know-how combined with analytical and social skills. The technology works best in roles demanding complex thinking and judgement. Only 13% of jobs in the region fall into that group, compared with 39% in advanced economies.