ADB has cut its 2026 growth forecast for developing Asia and the Pacific to 4.9 per cent from 5.5 per cent in 2025, citing Middle East conflict-driven energy market disruptions.
It raised its 2026 inflation forecast to 4.3 per cent, while warning that geopolitical tensions, tighter financial conditions and trade uncertainty could further weigh on regional growth despite expected recovery in 2027.
ADB said that disruptions to global energy markets are expected to unwind only gradually despite a framework agreement signed in June. It forecast regional inflation at 4.3 per cent in 2026, compared with 3 per cent in 2025, an upward revision of 0.7 percentage points from April; its 2027 inflation forecast remains 3.4 per cent.
Albert Park, chief economist, Asian Development Bank said: “Durable implementation of the framework agreement would help normalize global energy markets, but the pace of adjustment is highly uncertain with significant downside risks. Economic growth in developing Asia and the Pacific remains resilient, but persistent headwinds caused by the conflict require a careful policy balance between supporting growth and containing inflation.”
ADB said renewed conflict escalation and prolonged geopolitical uncertainty remain key risks that could further tighten energy markets, raise risk premia and intensify inflationary and external pressures. It also cited tighter global financial conditions, higher tariffs and elevated trade policy uncertainty.
The growth projections for 2026 were lowered for most subregions except developing East Asia. It kept the China at 4.6 per cent for 2026 and 4.5 per cent for 2027, revised India down to 6.6 per cent for 2026 and maintained 7.3 per cent for 2027.
Projections for Southeast Asia and the Pacific were also trimmed because of weaker domestic demand and tourism, rising inflation and higher import costs.
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