Goldman Sachs: Asia-Pacific Growth Resilience Strong, AI Exports Boost Taiwan and South Korea Upgrades

Overview

This report by Goldman Sachs tracks Asia-Pacific growth momentum data, focusing on April 2026 and recent developments in major regional economies. The core conclusion is that despite headwinds from the energy supply shock, Asia-Pacific growth remains resilient. The institution’s analysis using high-frequency activity indicators (CAIs) and Purchasing Managers’ Indexes (PMIs) finds that regional growth has stabilized overall in the past month. Notably, due to unexpectedly strong AI-related exports, Goldman Sachs has raised growth forecasts for Taiwan and South Korea; meanwhile, energy cost increases led to downward revisions for Southeast Asia and India. Financial conditions show significant divergence within the region—tech-driven economies benefit from booming equity markets while some emerging markets face tightening pressures.

Core views

Demand and production: Asia-Pacific manufacturing PMIs saw a net improvement in April, with especially strong readings in South Korea and Japan, but weakening in most ASEAN countries except Malaysia. On the services side, Japan and China showed relatively soft data, but India's services PMI rose to 58.8, the highest in five months. Supplier delivery times have slowed; though less severe than the 2021-22 peak, supply chain delays are increasing. Growth forecast revisions: Goldman Sachs made structural adjustments to regional growth forecasts in recent weeks. On one hand, anticipating negative impacts from the energy supply shock, growth forecasts for Southeast Asian countries and India were lowered; on the other hand, AI-related export strength prompted upgrades for Taiwan and South Korea. Chart data show Taiwan had the largest net upward revision over the past 60 days (~+3.3 percentage points), with Hong Kong and South Korea also revised up, and Singapore, the Philippines, and Thailand seeing larger downgrades. Financial conditions divergence: Year-to-date 2026, financial conditions trends vary across the region. India, Indonesia, Malaysia, and Australia have seen tightening driven by weaker stocks and/or rising rates; China’s financial conditions tightened with the yuan strengthening on a trade-weighted basis. In contrast, Taiwan and South Korea, with buoyant equity markets, have seen significant easing of financial conditions; Thailand’s financial conditions eased amid currency depreciation.

Analysis framework

Goldman Sachs utilizes its proprietary Current Activity Indicators (CAIs) as the core tool, cross-verified with official PMI data. CAIs aggregate multiple high-frequency economic indicators weighted to provide a more timely reflection of monthly economic activity changes, smoothing volatility compared to single indicators. The report compares CAIs with GDP data and observes three-month moving averages to assess momentum stability across economies. Additionally, the Financial Conditions Index (FCI) is used to quantify how interest rates, exchange rates, and asset prices impact financing environments, explaining differential economic responses to common external shocks such as energy price fluctuations. This dual "high-frequency activity indicators + financial conditions" framework helps quickly identify economies buoyed by AI export growth and those pressured by rising energy costs.

Methodology notes

• Macroeconomic frameworkOthers

  Current Activity Indicators (CAIs)

  A composite high-frequency economic indicator constructed by weighted aggregation of multiple real-time data points, more sensitive than traditional GDP or PMI for capturing short-term economic momentum changes; commonly used for monthly growth tracking.

• Macroeconomic frameworkOthers

  Financial Conditions Index (FCI) Analysis

  An index that synthesizes multiple financial variables such as interest rates, exchange rates, and stock prices to measure the looseness or tightness of the financial environment affecting the real economy, aiding in assessing monetary policy transmission.

• Industry/Sector Analysis FrameworkSupply Chain Upstream-Midstream-Downstream Transmission

  Supply Chain Delivery Delay Analysis

  By examining the supplier delivery component in PMI data, this framework assesses potential upstream supply bottlenecks’ impact on downstream production and inflation, an important perspective for evaluating supply-side constraints.

Key data

• India Services PMI58.8Risen to five-month high, indicating strong expansion in services
• Taiwan 2026 GDP Forecast Net Revision+3.3 percentage pointsSignificantly upgraded over past 60 days, mainly driven by AI exports
• Singapore 2026 GDP Forecast Net Revision-2.2 percentage pointsMarked downgrade over past 60 days due to energy shock impact
• Regional Manufacturing PMI TrendNet improvementOverall slight rise in April, strong in Japan and Korea, weak in ASEAN

Impact & implications

The report concludes that Asia-Pacific economic growth is exhibiting clear structural divergence. The AI technology wave is emerging as a growth engine for developed East Asian economies such as Taiwan and South Korea, offsetting some concerns about weak global demand. However, energy supply shocks present a material headwind for energy-import-dependent emerging markets like Southeast Asian countries and India, potentially causing inflation pressures and slower growth to coexist. The divergence of financial conditions means equity market performance and exchange rate fluctuations are key variables influencing real economy financing costs across countries. Investors should watch for credit tightening risks in economies where financial conditions remain restrictive.

Risks

• Energy supply shock persists longer than expected, further increasing production costs
• Global AI demand growth slows, leading to weaker-than-expected growth for export-driven economies
• Supply chain delays worsen, triggering renewed inflation pressures

What to watch

• Inflation data and central bank monetary policy responses in Southeast Asia and India in coming months
• Sustainability of AI-related exports in Taiwan and South Korea and their contribution to overall GDP
• Trade-weighted RMB exchange rate trends and their impact on domestic financial conditions in China