Key Details
The update examines both sides of the AI economy: production of AI-related goods and use of AI across firms and jobs. Its growth forecast is for East Asia and the Pacific, not India.
Finding | Evidence |
|---|---|
Regional outlook | East Asia and Pacific growth is forecast to average 4.4% a year in 2026–28. |
Firm adoption | 23% of Indian firms surveyed reported using some form of AI; 4% paid for AI software or systems. The comparable figures for Thailand were 12% and 4%. |
Recruitment | About 2–3% of online job postings in India sought AI-related skills, against roughly 1% in the emerging East Asian economies studied. |
Talent and invention | The report records 2.52 million Indian STEM graduates using 2021–22 education data, but finds India’s AI patenting low relative to the size of that graduate pool. |
The AI Boom Is Strongest in Manufacturing
Demand for AI-related goods is supporting exports and industrial activity in East Asian economies connected to global technology supply chains. That helps explain why the region’s growth outlook has held up better than previously expected. It also creates an exposure: a reversal in global AI investment could weaken trade and investment together.
The report presents a contrasting pressure on growth. High energy costs are weighing on parts of the region, particularly Pacific Island economies. AI-related industrial strength therefore does not describe the experience of every country—or every sector.
Using AI Is a Different Challenge from Producing Its Hardware
AI’s influence is clear in regional manufacturing, but less visible across the wider economy. Firms cite cost, limited knowledge, and security and privacy concerns as barriers to adoption. For most emerging economies covered by the report, the nearer-term opportunity is to use existing AI tools and adapt them to local tasks, rather than concentrate solely on developing frontier models.
The employment evidence is also more measured than claims of an immediate AI-driven jobs collapse. The report does not yet identify a clear negative effect on AI-automatable jobs in the emerging East Asian economies studied. Recruitment is changing, though: employers often seek analytical, problem-solving and communication skills alongside AI skills, not technical credentials alone.
India’s Talent Advantage Has Not Yet Become a Patenting Advantage
India is outside the report’s regional growth forecast, but its comparisons are instructive. Surveyed Indian firms reported greater AI use than Thai firms, and AI-related skills appeared more often in Indian online vacancies than in those of the emerging East Asian economies studied. Online vacancies reflect a particular segment of formal recruitment, not the entire labour market.
The sharper India finding concerns invention. India has one of the largest STEM graduate pools in the report’s comparison, yet sits well below the relationship the report finds between graduate numbers and AI patents. The report points to research institutions, firms working near the technological frontier and access to global AI knowledgeas complementary capabilities that matter in turning talent into invention. Its patent measure does not capture every useful AI application or all innovation by Indian workers.
Policy Relevance
For India, the distinction between AI use, local adaptation and original invention is important. They require different forms of support, and progress in one does not establish progress in the others. The firm survey points to adoption, while the patent comparison raises a separate question about how technical talent connects with research and commercial innovation.
The regional evidence also puts electricity, connectivity and skills within economic policy, not just technology policy. Reliable power and digital services affect firms’ ability to use AI; training that combines technical and broader workplace skills affects where workers can apply it. The case for expanding data-centre capacity should be judged alongside its power and water demands and the services that capacity enables — not treated as a proxy for AI adoption throughout the economy.
Follow the Full Report Here: World Bank, East Asia and Pacific Economic Update: Riding the AI Wave (October 2026)