Overview

This document provides an executive summary of a report examining the economic landscape of the East Asia and Pacific (EAP) region. It focuses on the dual influence of a global surge in artificial intelligence activity and the constraints imposed by high energy costs. The analysis covers the participation of regional economies in AI supply chains, the slowing but robust growth forecasts, and the specific challenges faced by Pacific Island economies. Furthermore, the report examines the industrial sector’s reliance on AI-related industrial activity and the emerging demand for a workforce equipped with both technical and soft skills. It also touches on sectors with high potential for job creation, such as tourism and agribusiness, which are characterised by low entry barriers and labour-intensive processes.

Purpose

The report is designed to assist policymakers and industry leaders in making informed decisions regarding economic sustainability and technological integration. It exists to highlight how AI can be leveraged through investments in skills and infrastructure to foster productive employment and regional growth. By identifying the barriers to AI adoption—such as knowledge gaps, costs, and security concerns—the document aims to guide the development of institutional and regulatory frameworks. It also serves to inform strategies for mitigating the risks associated with imported fossil fuel dependence and environmental shocks like El Niño, which can adversely affect inflation and borrowing costs across the region.

Methodology

The analysis employs a framework that assesses growth projections for EAP economies, specifically forecasting an average growth rate of 4.4 per cent per year for the 2026–28 period. It utilises a comparative approach to evaluate AI adoption levels in EAP countries against those in advanced economies. The methodology includes a detailed examination of small state emerging market and developing economies (EMDEs), focusing on pillars such as remoteness, connectivity, and vulnerability to natural disasters. Data on outmigration, official development assistance, and remittances are analysed to understand the unique economic pressures on these states. The report also investigates the fundamental enablers of a conducive business environment, such as the availability of reliable energy grids and access to “compute” through local data centres.

Use for finance professionals

Finance professionals can use this report to conduct nuanced risk assessments of the East Asia and Pacific markets, particularly concerning energy price volatility and the impact of climate-related events on financial stability. The insights into the AI supply chain allow for the identification of specific regions and sectors poised for growth due to their manufacturing involvement. Investors can also evaluate the potential for “no-regrets” policies in infrastructure, such as high-capacity energy grids and data centres, which support both technological advancement and broader economic investment. Additionally, the report provides a basis for understanding structural shifts in labour markets and the necessity for skilled workforces, helping to inform long-term investment strategies in human capital and digital foundations.