East Asia and Pacific Growth Hinges on AI Integration

Viet Nam, Malaysia, and Thailand are the primary beneficiaries of the current high-tech surge, with growth forecasts raised by 1.1, 0.7, and 0.7 percentage points respectively. These nations have successfully carved out roles within global production networks, feeding the infrastructure required for the worldwide AI expansion. Conversely, China grapples with sluggish domestic demand and a cooling property sector, while Pacific Island nations face a starker reality, with growth projections dipping to 2.2% due to energy price volatility and external economic pressures.

Carlos Felipe Jaramillo, the World Bank’s regional Vice President, notes that while the region is deeply integrated into global value chains, it must now pivot toward broader internal adoption. Currently, AI implementation is hampered by high costs, security concerns, and a localized skills gap. Only 13% of jobs in the region involve the complex thinking and judgment tasks where AI is most effective, a sharp contrast to the 39% seen in advanced economies. To bridge this divide, the World Bank advocates for "Small AI"—adapting existing, affordable tools to practical local needs in sectors like agribusiness and tourism.

Driving this transition requires a concentrated push from the private sector to modernize digital infrastructure and workforce training. Sarvesh Suri of the IFC emphasizes that mobilizing private capital is essential for helping smaller firms remain competitive. For governments, the mandate is dual: act as early adopters to improve public services while simultaneously refining the regulatory frameworks necessary to ensure that the shift toward automation supports, rather than displaces, the regional workforce.