AMRO warns AI slowdown may cut 2027 ASEAN+3 growth to 2.6%
The ASEAN+3 Macroeconomic Research Office warns that an AI downturn could hit Asian exports, capital flows and borrowing costs
- The ASEAN+3 Macroeconomic Research Office (AMRO) warns that a slowdown in AI demand could cut the 2027 economic growth forecast for Southeast Asia, China, Japan, and South Korea to 2.6%.
- This potential 2.6% growth rate represents a 1.5 percentage point reduction from the baseline forecast of 4.1%, making the AI slowdown the most significant adverse scenario AMRO assessed.
- The ASEAN+3 region is particularly vulnerable because it is central to the global AI supply chain, accounting for about two-thirds of the growth in global AI-related trade.
- AMRO also noted that a sharp correction in AI financial markets could spread through the region's financial systems, with South Korea, Japan, and Hong Kong being especially exposed.
The ASEAN+3 Macroeconomic Research Office (AMRO) warned on Monday, October 5, 2026, that a slowdown in artificial intelligence (AI) demand could cut 2027 economic growth in Southeast Asia, China, Japan and South Korea by 1.5 percentage points. AMRO’s regional coverage comprises members of the Association of Southeast Asian Nations (ASEAN), together with China, Japan and South Korea. The research office released its financial stability report and updated regional economic outlook on October 5.
Asia’s chip exports face risks if AI investment slows
AMRO described the region as “particularly exposed” because of its central position in global supply chains and growing links to AI-related financial markets. A reversal in the technology boom, including a potential bubble bursting, could undermine rapidly expanding exports and unsettle financial markets.
The global race to develop AI has driven demand for chips and other high-tech equipment used in data centres, helping several Asian economies achieve record exports.
AMRO estimates that the region accounts for about two-thirds of the growth in global AI-related trade, underscoring the importance of technology demand to Asian exporters.
Investors have increasingly questioned whether the AI boom is sustainable, amid concerns that technology-company valuations may be inflated. Circular transactions, in which companies fund and do business with one another, have added to those concerns.
AI slowdown could cut ASEAN+3 growth to 2.6% in 2027
AMRO’s October regional outlook models ASEAN+3 growth of 2.6% in 2027 under an adverse AI-demand scenario, 1.5 percentage points below the 4.1% baseline. The scenario assumes growth in US technology investment, used as a proxy for global AI demand, returns to its 2024 pace; investment continues to expand, although more slowly.
AMRO’s AI slowdown scenario produces the largest growth reduction among the adverse cases it assessed. Prolonged shipping disruption in the Strait of Hormuz could separately subtract 0.6 percentage point from ASEAN+3 growth in 2027, while weather disruption associated with El Niño is another risk identified by the research office.
AI market losses could spread through Asian financial systems
AMRO warned that an abrupt and disorderly market correction could spread through trade, capital movements and financing costs, extending the damage beyond technology companies.
South Korea’s stock market is particularly exposed because investment is concentrated in AI-related businesses, according to AMRO. Japan and Hong Kong also move closely with US technology and AI assets, allowing shocks to spread even without a domestic economic trigger.
“A sharp correction in AI-related financial assets could spill over to the broader financial system through forced deleveraging and tighter credit conditions,” AMRO said in its financial stability report. Forced deleveraging involves selling assets to reduce debt.
AMRO is monitoring company valuations, borrowing levels, funding sources and underlying demand to assess the likelihood of an AI market correction.
“There are some warning signals, but we would say that they are not grave yet,” Runchana Pongsaparn, AMRO’s group head and lead economist, said at the October 5 briefing.
