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Deutsche Bank on Asia: AI Cycle Lifts 2026 Growth to 5.5% — Fiscal Push, Monetary Pull

Posted on by Eben@CANSLIM Research
Eben@CANSLIM Research's avatarEben@CANSLIM Research

Deutsche Bank Research forecasts Asia’s GDP growth accelerating to 5.5% in 2026 from 5.4% in 2025, driven by the AI and semiconductor cycle, surging exports and equipment investment. The bank warns that continued fiscal support is increasingly at odds with a broadening monetary-tightening cycle, as higher US rates act as a gravitational force on rates across much of the region. China remains the region’s main idiosyncratic story, where stronger policy support coincides with a difficult property-sector transition.

Key Takeaways

  • Deutsche Bank Research expects Asia’s GDP growth to reach 5.5% in 2026, up from 5.4% in 2025, led by the AI and semiconductor cycle.
  • Bank Indonesia and the BSP have reversed part of their 2024–25 easing, with another BSP hike in the pipeline; the RBI is forecast to begin hiking in Q4, followed by BNM and the BoT in 2027.
  • South Korea’s central bank is expected to deliver an extended series of rate hikes and Taiwan’s CBC to begin hiking this month, with both policy rates rising to levels not seen since 2008.
  • China’s real GDP growth is estimated to have moderated to 4.1% YoY in July from 4.4% in June, below the government’s 4.5%–5.0% full-year target range.
  • Hong Kong’s real GDP expanded 4.3% YoY in Q2, prompting the government to revise up its full-year growth forecast to 3.5%–4.5% from 2.5%–3.5%.

Lead Analysis: What Deutsche Bank’s Asia Outlook Says

In a report titled “Fiscal Push, Monetary Pull,” Deutsche Bank Research’s chief economists Juliana Lee, Kaushik Das and Yi Xiong, alongside economists Junjie Huang and Deyun Ou, argue that Asia is well on its way to stronger GDP growth of 5.5% in 2026, supported by the AI and semiconductor cycle, surging exports and equipment investment. Regional activity continues to surprise on the upside, with Singapore, South Korea and Taiwan benefiting from strong current-account balances that provide an additional buffer for their currencies.

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