ASIATODAY.ID, WASHINGTON — The East Asia and Pacific region is entering a period of heightened economic pressure.
A new report by the World Bank Group warns that regional growth is set to slow significantly in 2026, driven by a global energy shock and rising geopolitical uncertainty.
Economic growth across the region is projected to fall to 4.2% in 2026, down from 5.0% in 2025. The trigger is the surge in energy prices middle East conflict, which has compounded the effects of trade barriers, global policy uncertainty, and domestic economic challenges.
Countries heavily dependent on energy imports are expected to be the hardest hit. A sustained 50% increase in fuel prices could reduce household incomes in the region by 3–4%, intensifying economic strain.
Meanwhile, the region’s largest economy, China, is also losing momentum. Growth is forecast to slow from 5.0% in 2025 to 4.2% in 2026, with only a modest uptick to 4.3% in 2027. Weak domestic demand, ongoing property sector challenges, and a global slowdown are weighing heavily on its outlook.
“Growth in East Asia and the Pacific continues to outperform much of the world, even in uncertain times,” said Carlos Felipe Jaramillo on April 8, 2026.
However, he stressed that sustaining this momentum will require countries to confront structural challenges and seize opportunities in the digital economy to boost productivity and job creation.
Aaditya Mattoo added that while the region has shown remarkable resilience, current pressures risk undermining productivity growth. He emphasized that targeted support for households and businesses is crucial to protect jobs today, alongside reviving stalled structural reforms to unlock future growth.
Despite mounting risks, there are bright spots. Surging exports and investments linked to artificial intelligence (AI) have emerged as key growth drivers, particularly in Malaysia, Thailand, and Vietnam.
However, AI adoption remains limited due to gaps in digital infrastructure and workforce skills.
The report also highlights that well-designed industrial policies can accelerate growth—provided they are backed by strong economic fundamentals such as infrastructure, education, and sound regulatory frameworks.
Countries like South Korea have demonstrated how targeted support can successfully boost productivity and create higher-quality jobs.
In contrast, nations with weaker institutional foundations and persistent protectionism—especially in the services sector—continue to struggle in maximizing the benefits of such policies.
Without decisive reforms and targeted policy responses, the global energy shock could push the Asia-Pacific region into a deeper slowdown, with direct consequences for household welfare and long-term economic prospects. (AT Network)
Follow Us at Google News and WA Channel