HSBC: Asia's Economy to Slow Due to Export, AI Worries
The growth of Asia’s GDP is expected to slow in 2026 due to shrinking export demand as well as risks in the AI story.
The GDP of the Asia ex-Japan region is expected to grow by 4.5 percent in 2026, according to a forecast by HSBC, down from 4.9 percent in 2025.
China will slow down from 4.9, 5 percent last year to about 4.6 percent this year, with deceleration anticipated elsewhere within the region, including Hong Kong (3.2 percent to 2.4 percent), India (7.7 percent to 6.5 percent) and Malaysia (5 percent to 4.5 percent). Some economies may see growth increases, including Australia, New Zealand and Indonesia.
«Why do we see that slowdown? It's in part because the rotation of growth from external demand, exports to domestic demand is incomplete,» said Frederic Neumann, HSBC’s chief Asia economist and co-head of global research Asia, in a virtual press conference.
«And as we expect exports to slow at the margin this year, partly because of payback from US tariffs last year, partly because the AI hardware boom may slow at the margin, it is important that domestic demand and consumption and investment really accelerate. The challenge is that this is not yet happening uniformly across the region.»
Chinese Equities Preferred Despite Slowdown
Despite an economic slowdown, HSBC still prefers Chinese equities as an investment of choice due to unused household savings of about $23 trillion.
«That's the largest cash pile the world has ever seen. Not all of that will be invested, but a decent chunk of it can be invested,» explained Herald van der Linde, head of equity strategy, Asia Pacific.
In addition, the bank is also positive on Indonesia and India.
Concerns About the AI Story
Still, investors are undoubtedly focused on the artificial intelligence (AI) story and whether the emerging technology’s rally can be sustained.
«The issue, to a certain extent, is that […] valuations have run up for some of these stocks. Some of them have tripled,» said van der Linde, highlighting Korea as an example.
«If there's something changing in the AI story, and we need a repositioning in markets, we get an exit for everybody who wants to exit the door at the same time. And that's normally not a very good sign.»
