ADB sees slower growth for Asia and the Pacific in 2026 amid global energy crisis
MANILA, PHILIPPINES: The Asian Development Bank (ADB) has lowered its growth forecast for developing Asia and the Pacific to 4.9% in 2026, down from 5.5% in 2025 and 0.2 percentage points lower than its April projection, the bank said on Wednesday.
In its Asian Development Outlook (ADO) July 2026, ADB said prolonged disruptions to global energy markets linked to the Middle East conflict have weighed more heavily on the region’s prospects than expected. The bank kept its 2027 growth forecast at 5.1%, reflecting an anticipated recovery as energy pressures ease.
ADB warned that the effects of the energy shock extend beyond fuel prices to fertilisers, other commodities and supply chains, keeping inflationary pressures elevated. Regional inflation is now forecast at 4.3% for 2026, up from 3.0% in 2025 and 0.7 percentage points higher than the April estimate. The inflation forecast for 2027 remains at 3.4%.
“Durable implementation of the framework agreement would help normalise global energy markets, but the pace of adjustment is highly uncertain with significant downside risks,” said ADB Chief Economist Albert Park. “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.”
The outlook highlights several downside risks, including renewed escalation of the conflict, prolonged geopolitical uncertainty, tighter global financial conditions, rising sovereign bond yields and higher borrowing costs. The bank also flagged the potential impact of higher tariffs and elevated trade policy uncertainty, and warned that rising fertiliser prices could threaten agricultural output and food security.
Growth forecasts for 2026 were trimmed for most subregions, with the exception of developing East Asia. The People’s Republic of China’s forecasts were unchanged at 4.6% for 2026 and 4.5% for 2027, supported by strong exports and infrastructure investment. India’s growth forecast was revised down to 6.6% for 2026 and left at 7.3% for 2027. Projections for Southeast Asia and the Pacific were also reduced, reflecting weaker domestic demand and tourism, rising inflation and higher import costs.
ADB, founded in 1966 and owned by 69 members, said it will continue to work with members and partners to address the region’s economic challenges and support sustainable, inclusive and resilient growth.
