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ADB · Asia Growth · Inflation · Middle East Conflict
The Asian Development Bank warned that the Middle East war will drag on Asia's economies, predicting growth to slow to 5.1 percent across the region for this year and next, with potential further declines to 4.7 percent in 2026 and 4.8 percent in 2027 if the conflict prolongs.
The bank's assessment indicates most developing Asia and Pacific economies face worsening growth outlooks. As a net energy importer, the region is vulnerable to higher energy prices, which generate significant income losses, according to ADB chief economist Albert Park.
A prolonged conflict could also spike inflation by 5.6 percent, significantly higher than the 3.6 percent and 3.4 percent predicted under an "early stabilisation scenario." Park highlighted Iran's squeeze on shipping in the Strait of Hormuz, impacting food security through increased fertiliser and diesel prices, potentially leading to lower agricultural yields. Additionally, continued trade uncertainty from US President Donald Trump's tariff regime is expected to weigh on regional investment.
China's growth is projected to dip to 4.6 percent this year and 4.5 percent next, down from five percent, due to property market weakness and slower exports.
