Asia's Emerging Economies Face Tougher Growth Path Amid AI and Energy Divides

Emerging economies in Asia are navigating a more challenging road to growth, with a widening gap between countries benefiting from AI-related exports and those grappling with structural issues and energy price shocks. This divergence is a key theme as finance ministers and central bankers prepare to gather in Bangkok for the IMF and World Bank Annual Meetings. The region's economic landscape is increasingly defined by two opposing forces: a surge in demand for AI hardware and the volatility of global energy markets. Nations like Taiwan, South Korea, and to some extent Thailand and Malaysia, stand out as major exporters of AI hardware. The IMF notes that these four economies exceeded first-quarter expectations by an average of 4.4 percentage points, driven by exports of semiconductors and AI-related products. Conversely, the ongoing geopolitical tensions in the Middle East have led to a significant spike in energy prices, impacting energy-importing nations. In Thailand, retail gasoline prices have surged by approximately 30 percent, contributing to inflationary pressures and increasing the fiscal burden. The Asian Development Bank (ADB) has revised its 2026 inflation forecast for Thailand upwards to 2.9 percent. Furthermore, higher energy costs translate into increased fertilizer prices, potentially exacerbating food inflation, with the added risk of reduced harvests due to El Niño. Beyond these external shocks, many Asian emerging economies face deep-seated structural challenges. The traditional model of cheap labor and export-oriented manufacturing, which fueled past growth, is becoming less effective as the need for productivity gains and higher-value production intensifies. Thailand, in particular, is experiencing rapid population aging and unusually high household debt for a developing economy, both of which hinder long-term growth prospects. According to the latest assessments from the IMF, ADB, and World Bank, while emerging and developing Asia is projected to grow around 5.0 percent in 2026, the disparity between countries is stark. Vietnam is forecast to achieve robust growth of 7.5 percent, while Thailand is expected to be among the slowest growers. This highlights the growing divide between economies leveraging the AI boom and those burdened by energy import costs and internal structural weaknesses. The increasing reliance on AI-related industries presents new opportunities but also carries concentration risks. Countries like Thailand, which are major AI hardware exporters but also face domestic structural vulnerabilities, are finding themselves at a crossroads, needing to carefully balance these competing forces.