# SCB EIC forecasts robust economic growth in Asia for 2026 fueled by global electronics cycle and AI

- Link: https://www.thailand-business-news.com/news/333031-scb-eic-forecasts-robust-economic-growth-in-asia-for-2026-fueled-by-global-electronics-cycle-and-ai
- Published: 2026-10-08T06:59:00+07:00
- Author: Nadjib Mohamed

SCB EIC projects strong economic growth in Asia in 2026, driven by the accelerating
global electronics cycle and AI investment. However, the region’s growth faces pressures
from high energy prices, uncertainty surrounding US trade policy, and tighter financial
conditions, impacting countries differently depending on their energy structure,
export base, and role in the global AI supply chain.
A prolonged war in the Middle
East is likely to keep global oil prices high, passing on to production costs and
inflation in energy-importing countries in the region, and may prompt some central
banks to gradually raise interest rates. Meanwhile, uncertainty surrounding additional
US tariffs remains a risk to Asia’s manufacturing and export base. Nevertheless,
accelerating investment in AI is supporting continued growth in Asia’s demand for
electronics and the region’s digital infrastructure.

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## Asia’s major economies have the potential to build on their respective strengths in the future

**China: Leveraging AI to Upgrade Manufacturing and Maintain Competitiveness Despite
Weak Domestic Demand.** China is accelerating the application of cost-effective 
AI to improve production efficiency and enhance the competitiveness of its industries.
This has resulted in continued export growth despite trade pressure from the United
States. However, the real estate sector and domestic consumption remain fragile,
making economic growth heavily dependent on manufacturing and exports.
**Japan: 
The economy is emerging from deflation, but rising interest rates could impact global
financial markets.** Continued growth in corporate profits and wages reflects Japan’s
economic recovery, while rising inflation and interest rates signal a move away 
from prolonged periods of low inflation. However, Japan’s policy interest rate hikes
to their highest level in decades could affect capital flows and increase volatility
in global financial markets, as Japanese investors hold the largest amount of U.
S. government bonds in the world.**India: High Growth Potential, but Needs to Accelerate
Manufacturing Base and Reduce Structural Constraints.** India is poised to become
the world’s third-largest economy in the coming years, driven by domestic consumption
and service sector growth. However, India still needs to accelerate the development
of its manufacturing base to enhance its long-term growth potential, as its high
reliance on energy and commodity imports makes it vulnerable to global economic 
volatility.**ASEAN: Benefiting from AI supply chains and manufacturing relocation,
but increased ties with China present both opportunities and risks.** The ASEAN 
economy is projected to outperform the global economy, driven by FDI and the growing
role of electronics and AI supply chains. However, ASEAN faces two simultaneous 
challenges: increased competition from Chinese goods in the domestic market and 
the risk of stricter US scrutiny of the origin and transshipment of goods from China.
This reflects that while ASEAN benefits from diversified manufacturing bases, deeper
ties with China could present both opportunities and risks in the future.

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## For Thailand, SCB EIC views three key opportunities as being located in a high-growth region.

These include: 1) expanding markets for goods, services, and tourism to Asian countries
with increasing purchasing power; 2) connecting with new investments and supply 
chains in the region; and 3) enhancing Thailand’s role as a production, transportation,
and service hub in Asia. However, transforming these opportunities into growth requires
accelerating the development of workforce skills, technology, infrastructure, and
the capabilities of Thai entrepreneurs to enter higher value-added activities.