Stories
Asia Highly Vulnerable to AI Correction, Warns ASEAN+3 Macroeconomic Research Office
M
Moneycontrol•05-10-2026, 09:09
Asia Highly Vulnerable to AI Correction, Warns ASEAN+3 Macroeconomic Research Office
- •Southeast Asia, China, Japan, and South Korea face significant risk from a potential collapse in the AI boom, which could trigger financial and economic shocks.
- •The region's deep integration into global AI supply chains and financial markets makes it particularly exposed to a disorderly correction.
- •A downturn could lead to lower technology exports, portfolio losses, capital outflows, and refinancing pressure on leveraged tech firms.
- •Asia accounts for two-thirds of global AI-related trade growth, with physical production concentrated in the region, making it susceptible to a sudden drop in AI demand.
- •Concerns include high tech company valuations, surging spending on chips and data centers, and opaque financing deals, with central bankers globally raising sustainability questions.
Key Questions Answered
Asia plus China, Japan and South Korea are at the center of global AI supply chains and are increasingly integrated into AI-related financial markets, leaving them exposed to shocks that could propagate through technology exports, portfolio losses, and capital outflows.
A disorderly correction could propagate via lower technology exports, portfolio losses, capital outflows, refinancing pressure on leveraged technology and infrastructure firms, and weaker investor confidence.
South Korean equity markets are heavily concentrated on AI, and the region handles a massive share of physical tech production, ranging from memory chips in South Korea to semiconductor assembly in Malaysia, accounting for two-thirds of global AI-related trade growth.
