Artificial intelligence has been the story of the year in 2025, in Asia and elsewhere. But heading into 2026, more and more people are wondering whether the supposed AI “revolution” will be as widespread, dramatic and beneficial as some claim.
At a recent forum in Tokyo, Brodjonegoro Bambang, dean of the Asian Development Bank Institute, warned that although AI could boost the region’s economy,”major headwinds” ranging from job losses and increased income inequality to expanding the digital divide need to be addressed.
He and others highlight environmental concerns over the prodigious amounts of electricity and water that the data centres associated with AI are consuming or threaten to consume, creating supply problems in the emerging or developing economies where many of these centres are either located or planned.
Concerns are also being expressed by some as to whether the massive capital expenditure demands for AI could precipitate crises in a banking and financial system that is already burdened by debt and asset bubbles.
Chrisopher Wood, head of equity strategy at Jefferies Global, predicted recently in his Greed and Fear newsletter that “the US stock market will be asking hard questions about the returns, or the lack of them, from the AI capex arms race by the middle of next year”.
“It looks as if process has already begun at the margin with growing focus on where companies are borrowing to finance capex rather than spending from cash reserves,” he wrote. “The more the returns on AI capex are questioned, the more also will be related concerns about looming excess capacity in data centres. This in turn will raise concerns regarding funding of data centre construction and related infrastructure.”
A recent Reuters report noted that since ChatGPT exploded three years ago, “companies big and small have leapt at the chance to adopt generative AI and to stuff it into as many products as possible. But so far, the vast majority of businesses are struggling to realise a meaningful return on their AI investments”.
In theory, the Asia Pacific region is well-placed to take advantage of AI-enabled transformation and to mobilise tech-driven industrial development. The region has a broad skills base and produces three quarters of the world’s STEM (science, technology, engineering or mathematics) graduates.
Infrastructure investment across 25 countries in emerging Asia is seven times the average for Organisation for Economic Cooperation and Development nations. Asia Pacific’s share of global manufacturing has doubled since the early 1990s, with education rising as sharply as extreme poverty is falling. However, one-third of the region remains unconnected from internet access.
AI represents what Bambang described as a “double-edged sword” for development in Asia, carrying both considerable promise and significant risks.
It’s forecast to lift GDP in the Asia Pacific region by 2% and generate as much as US$1 trillion in economic gains over the next decade alone. AI could also raise regional productivity by an estimated 5%.
But the potential gains are far from evenly distributed. Early evidence suggests that a quarter of firms are facing job losses, with women, youth and low-skill service sectors particularly vulnerable.
AI-driven automation is also reshaping labour markets and exposing workers to new vulnerabilities.
