SCB EIC Projects Strong 2026 Economic Growth in Asia Amid Global Electronics Cycle and AI

SCB Economic Intelligence Center (EIC) projects strong economic expansion in Asia in 2026, underpinned by growth in the global electronics cycle and sustained investment in artificial intelligence (AI). This forecast recognises ongoing pressures from elevated energy prices, US trade policy uncertainties, and tighter financial conditions, which affect countries differently based on their economic structure and roles in global supply chains.

Growth Drivers and Regional Economic Variations

The continuation of the global electronics cycle and acceleration of AI investment are identified as primary contributors to Asia’s economic momentum. However, SCB EIC notes that high global oil prices, exacerbated by ongoing conflict in the Middle East, may increase production costs and inflation in energy-importing nations, potentially prompting central banks to raise interest rates.

US trade policy uncertainty, particularly regarding potential additional tariffs, poses risks to the manufacturing and export sectors across Asia.

Country-Specific Trends and Challenges

• China is advancing cost-effective AI applications to boost manufacturing efficiency and maintain export growth despite US trade pressures. Domestic challenges persist due to fragile real estate and consumer sectors, making manufacturing and exports critical growth drivers.
• Japan is exiting deflationary conditions, supported by corporate profit and wage growth. Nonetheless, rising interest rates to multi-decade highs may induce volatility in global financial markets, considering Japan’s large holdings of US government bonds.
• India is projected to become the world’s third-largest economy through domestic consumption and services expansion. Still, it requires accelerated development of its manufacturing sector and reduction of structural vulnerabilities, given its heavy dependence on energy and commodity imports.
• ASEAN economies are expected to outperform global averages, benefiting from foreign direct investment (FDI) and integration into electronics and AI supply chains. However, increasing domestic competition from Chinese goods and potential US scrutiny over goods’ origins present both opportunities and challenges.

Implications for Thailand’s Industrial Growth

SCB EIC identifies three main opportunities for Thailand within this high-growth region: expanding markets in Asia with rising purchasing power, integration with new regional investment and supply chains, and strengthening Thailand’s position as a production, transportation, and service hub.

Capitalising on these will require accelerated enhancement of workforce skills, technology adoption, infrastructure development, and capabilities among local entrepreneurs to move towards higher value-added activities.

Going forward, monitoring the evolution of global energy prices, US trade policies, and investment flows into AI and electronics manufacturing will be critical for assessing the region’s economic trajectory.