The Asia-Pacific region is entering a phase of moderate but steady slowdown. My analysis of macroeconomic indicators shows that GDP growth in the Asia-Pacific will decline from 4.3% in 2025 to 4.2% in 2026, and further to 3.6% in 2027. However, the key conclusion I draw from the latest Moody's Analytics data is that without the unprecedented artificial intelligence boom, the decline would have been far more painful.
The region's economy is most accurately described by the term "two-speed." On one hand, we are witnessing explosive growth in export industries related to the production of semiconductors and AI equipment. On the other, domestic consumption and traditional sectors are struggling under inflation and tight monetary policy. This imbalance is what defines the current dynamics.
Export champions: Korea and Taiwan riding the AI wave
The technology cycle has been most pronounced in South Korea. In the first half of the year, the country boosted exports to $496.7 billion, up 48.4% from the previous year's result. Semiconductor shipments surged by 162.6%, reaching $192.4 billion—this figure has already broken the annual record in just six months. The ICT sector's dynamics deserve special attention: exports grew by 120.5% to a record $253.9 billion, with chips and solid-state drives (SSDs) accounting for 83.7% of that amount. It is clear that global investments in AI servers have become the main driver.
Taiwan shows a similar picture. Exports for January-June grew by 47.1% to $416.6 billion, while GDP for the first half of the year added an impressive 14.15%. Authorities have already revised the forecast for the full year 2026 upward—to 11.05%. Notably, according to calculations by Nikkei and Mitsubishi UFJ, for the first time in history, the exports of South Korea and Taiwan simultaneously exceeded Japan's figure, which stood at about $384.4 billion.
Singapore has also been among the beneficiaries. In June, the country's non-oil electronic exports grew by 105.1% year-on-year, with integrated circuit shipments up 115.4%. This is a direct consequence of sustained demand for AI infrastructure components.
The flip side of the boom: internal imbalances
However, behind the facade of strong export figures lies a troubling reality. Domestic demand in most of the region's economies remains below pre-pandemic trends and global averages. High energy and food prices are accelerating inflation, eroding real household incomes. This puts central banks in a difficult position: fighting inflation through rate hikes or supporting weak consumption. Moody's notes that in 2026, regulators chose a moderate path, but this compromise does not address structural problems.
The gap within individual countries is particularly telling. In Taiwan, the high-tech sector has become the main locomotive, but the benefits of growth are distributed extremely unevenly, leaving the services sector, traditional industry, and small businesses behind.
Risks: when the driver becomes a threat
The main danger I see in the current configuration is the region's excessive dependence on the AI investment cycle. Rising electronics prices and local equipment shortages already point to overheating. The rally in technology stocks has pushed valuations to record levels, increasing vulnerability to a correction.
South Korea is particularly at risk, where memory manufacturers have reaped the maximum benefit from the AI boom. Any slowdown in investments in data centers and servers will immediately hit export revenues. Additional pressure comes from expensive capital and high energy prices, which increase operating costs for infrastructure operators.
Moody's assesses the risks to the baseline scenario as skewed toward deterioration. Among the key threats are a prolonged energy shock, new trade restrictions, a correction in financial markets, and a sharp cooling of the AI boom. Earlier, specialists from the Bank for International Settlements had already warned that the investment activity around artificial intelligence, which supported the global economy in 2025, is itself becoming a source of macro-financial risks.
My expert opinion: the region has fallen into a trap of its own success. AI infrastructure is a powerful but cyclical driver. For now, it compensates for the weakness of domestic markets, but sustainable growth requires diversification. Asia-Pacific countries would do well to more actively use export windfalls to stimulate domestic demand and reduce dependence on a single technology cycle; otherwise, a correction in the AI sector could trigger a deeper downturn than forecast.