KUALA LUMPUR: The Asia-Pacific (APAC) region’s growth is expected to moderate from 4.4 per cent in 2025 to 4.3 per cent in 2026 and 3.7 per cent in 2027, according to Moody’s Analytics.
It said South Korea, Taiwan (China), Singapore, and Malaysia will grow faster in 2026 than in 2025.
"The latter three will outpace China this year. So will three other major APAC economies: India, Vietnam, and Indonesia,” it said in its report "Asia-Pacific Outlook: AI Caramba!”.
Moody's Analytics said higher prices and tighter monetary policy stemming from the West Asia conflict would dampen domestic demand, squeezing household spending and weighing on investment in traditional manufacturing and services.
It added that oil prices are approaching their April highs, renewing the squeeze on global wallets and, for energy-importing Asia, the consequences are weaker terms of trade, higher headline inflation, and more pressure on fiscal subsidies.
"Economies most deeply integrated into the artificial intelligence (AI) supply chain will buck the broader trend,” it said.
Meanwhile, it said the risk of West Asia conflict escalation is compounded by El Nino, raising the prospect of simultaneous energy and food price shocks.
For Asia, that would mean more persistent inflation, weaker household purchasing power, and more pressure on central banks to tighten policy, it said.
"Financial markets are questioning the durability of the AI investment boom.
"The sharp selloff in several high-profile neocloud companies that build data centres and lease computing capacity to AI developers suggests investors are becoming less willing to underwrite the build-out at any price,” it said. - Bernama
