Technology and Energy Shocks Reshape the Emerging-Market Landscape

Overview

Goldman Sachs’ latest ‘Emerging Markets Macro Navigator’ report provides an in-depth analysis of two key forces driving divergence among emerging markets in 2026: the positive shock from the AI investment boom and the negative shock of energy supply disruptions caused by the Iran war. Given the stark differences in exposure across emerging economies to the energy and technology sectors, economic and market performance has become markedly divergent. Technology-export-oriented economies (such as Taiwan and South Korea) benefit from the pull of AI investment, enjoying trade surpluses and technology spillovers, while energy-import-dependent economies (particularly in Asia) face soaring inflation, currency depreciation, and fiscal strain. The report contends that this divergent pattern will continue to shape emerging-market performance in 2026.

Core views

Demand side: The AI investment wave has emerged as a major driver for emerging markets. The five largest U.S. hyperscale cloud providers are projected to invest $750 billion in data-center construction in 2026, with total global spending exceeding $1 trillion. Roughly two-thirds of this will go toward AI servers and related equipment, almost entirely manufactured in emerging Asia, significantly boosting technology exports from Taiwan, South Korea, Malaysia, Vietnam, and other key supply-chain hubs. In Taiwan, high-tech exports contribute about 26.6% of GDP, while South Korea’s AI-related exports could rise to 30% of GDP. Supply side: The Iran war has effectively closed the Strait of Hormuz, disrupting roughly one-fifth of global oil and gas shipments and cutting worldwide production by about 12% compared with pre-war levels. Brent crude futures have surged from just over $60 before the conflict to a range of $90–$120. Although non-Gulf producers have increased output, they have struggled to fill the gap, and damage to critical energy infrastructure has kept prices elevated. Policy response: Energy-importing countries are beginning to reduce fiscal subsidies and tighten monetary policy. The Philippines and Indonesia have already raised rates, and India may follow suit. Policymakers face a trade-off between inflation and growth, with those having limited fiscal space under particular pressure. By contrast, technology-export powerhouses may see only modest tightening of monetary policy.

Analysis framework

Goldman Sachs employs a supply-and-demand framework, mapping each emerging economy’s exposure to energy prices and technology goods exports to systematically analyze how the dual shocks affect different countries. The report first tracks developments in the two global forces—the AI investment boom and the energy-supply disruption—then plots each emerging market’s exposure along the energy and technology dimensions, examines how these shocks propagate through trade balances, inflation, and fiscal resources, and finally assesses policy responses while offering asset-allocation recommendations.

Methodology notes

• Supply-and-Demand FrameworkSupply-and-Demand Framework

  Analysis of Emerging-Market Divergence

  By analyzing each economy’s exposure on both the demand side (imports) and supply side (exports) in the critical energy and technology sectors, we can forecast how they will respond to global shocks

• Macroeconomic frameworkTaylor rule

  Monetary-Policy Response

  The report examines how central banks adjust policy rates based on inflation and growth data; rising inflation from the energy shock has prompted many central banks to shift toward tighter policies

• Macroeconomic frameworkPhillips curve

  Relationship Between Inflation and Unemployment

  The report discusses the link between inflationary pressures and labor-market stress, particularly in tech-exporting countries like South Korea, where inflationary pressures are relatively high

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Taiwan (TWD)

  Benefits from high-tech exports; a hub for AI server manufacturing

  Strengths

  Robust AI exports, GDP growth exceeding 9%, surging tax revenues

  Weaknesses

  Dependent on energy imports, facing upward pressure on the exchange rate

  Comparison

  Alongside South Korea, the largest beneficiary of technology exports

  Risks

  Rising energy costs, geopolitical risks

• South Korea (KRW)

  Reaps benefits from high-tech exports; a leader in memory-chip production

  Strengths

  Growing AI-related exports, strong stock-market performance

  Weaknesses

  Reliant on energy imports, grappling with inflationary pressures

  Comparison

  Alongside Taiwan, the largest beneficiary of technology exports

  Risks

  Rising energy costs, tightening monetary policy

• China (CNY)

  Remains relatively stable, with strong energy self-sufficiency

  Strengths

  High energy self-sufficiency, resilient exports, ample policy buffers

  Weaknesses

  Persistent weakness in the property sector, insufficient domestic demand

  Comparison

  More stable than most other emerging markets

  Risks

  Slowing external demand, spillover risks from the property sector

• India (INR)

  Under pressure from energy imports and soaring inflation

  Strengths

  Services sector relatively resilient, policy flexibility

  Weaknesses

  Dependent on energy imports, burdened by inflation and currency depreciation

  Comparison

  Among the Asian emerging markets most affected by the energy shock

  Risks

  Uncontrolled inflation, reactive monetary policy

Key data

• Decline in Global Oil Production~12%A drop of about 12% compared with pre-war levels
• Brent Crude Price Range$90–$120 per BarrelA sharp increase from just over $60 before the conflict
• U.S. AI Data-Center Investment$750 BillionProjected spending by the five largest hyperscale cloud providers in 2026
• Taiwan’s AI-Related Export Share26.6% of GDPTaiwan’s high-tech exports account for this share of GDP
• South Korea’s AI-Related Export ShareNearly 30% of GDPAI-related exports could rise to 30% of South Korea’s GDP

Impact & implications

The report argues that this divergent landscape will profoundly influence asset performance in emerging markets. Currency pairs tied to technology exports (KRW, TWD, MYR, SGD) are likely to outperform those exposed to energy (PHP, INR, IDR, THB). It recommends focusing on equity opportunities in China, South Korea, Brazil, Hungary, and South Africa—beneficiaries of either technology or energy exports—while remaining cautious about bond risks in energy-importing countries. The renminbi is expected to strengthen gradually, supported by China’s export success and the broader weakening of the U.S. dollar. Overall, emerging-market asset returns are projected to remain in the single digits.

Risks

• Prolonged disruptions to energy supplies beyond expectations
• Cooling of the AI investment boom
• Out-of-control inflation forcing central banks in multiple countries to tighten excessively
• Escalation of geopolitical conflicts

What to watch

• Resumption of navigation through the Strait of Hormuz
• Progress in the actual deployment of AI investments
• The pace of policy adjustments by central banks
• Trends in energy prices and inflation data